A good way should be using four SAA7114 (Philips video decoder) 'cause thay manages all scaling functions and a SAA7121 (philips video encoder)

But between them you must have buffers (sdram or others) if you want real time 'cause the four inputs data come at the same time. Then you must buffer them for recomposition.

i think just a 8052 for PIP apllication is a little short ...

Recently, i did the same application (+MPEG encoding) but the logic between decoder and encoder was a xilinx vitrex
(Expensive board with high tech devices like PLX Pci controller, BGA, ...)

But i think it's possible to do it with smaller (and cheaper) devices but not in DIP only SMD ...