No, you can't transmit video through a VideoFX.
In general it isn't possible to get decent framerates over an internet connection, or it will be very laggy if you do. You have to compress the video at the head end into H.264 (or equivalent), then decompress after receiving. These processing steps can add seconds to the delay time (you shoot arrow, 3 seconds later you see the arrow leave your bow.)
If you think about it, the model that is currently used by WoW and others is pretty good. They transmit to the viewer only the most essential information, for example: ToonX moves to postition 32.5,73,4,225.0 and turns 16 degrees (5 words) instead of an entire screen full of data that has to be sent to Every person that is logged in.