Merge 2 videos together like FaceTime

I have been working on an iPhone app, that will work similarly to FaceTime. I want to be able to take 2 videos and have one large and the other small like the FaceTime setup, but made into 1 video file for sending.

I know looking at the Video Editing code that you can merge files one after another, but I want to be able to play both videos simultaneously so that it will have the effect of two people talking to each other.

Any suggestions?