Yes...this is one of the many things being done using the Parallax Propeller microcontroller chip. As a matter of fact, Jeff Ledger (OBC) is one the gurus in the Parallax Propeller forum. I have been tinkering with this chip since my projects on the Hummer DTV has already dried down.
The Parallax propeller is a lot of fun. OBC has done some commodore related projects, built a Commodore tape interface, programming, etc. He and some guys came out with PROPDOS (a DOS like os),etc. I am still a "newbie" compared to those guys over there. That graphics picture on the monitor is actually a Graphics_Demo.
BTW: You can build this from scratch or buy the kits from Parallax or this one...your choice. I have the educational kit, then went and bought the protoboard, cloned Parallax's dev board and even bought couple of boards from one of the members. I started with Jeff's tutorials and part of his "book" that will be published soon(?).