I'm surprised no-ones posted this before, its very useful for an arcade machine, basically the same as an ArcadeVGA card.
Four people have posted about the TV-Tool hack these past copule of months alone. I posted about it like 6 months ago (and someone else brought it up long before that, but the Chrontel write-up wasn't up then). Problem is that no-one wants to try it, since you need to solder directly to surface mount components, and that's quite hard.
It is not even close to being as good as the ArcadeVGA. The TV out chipset only outputs at one resolution (512x288 if I remember right) and just scales other resolutions to fit, versus the ArcadeVGA that runs at multiple resolutions, as close to arcade as possible. If you're thinking about cost savings, remember to factor in that you need to register TV-Tool to use it more than breifly.
One more thing, you can do this mod to most TV-out chipsets that TV-Tool supports, it's just that the Chrontel chipset has a full writeup on how to do it.