MM2 doesn't included the feature, but you can do it with a little effort.
Check the bottom of the Editing > Video > Transitions page of my site... and
check Rehan's website for easier ways. There's a link to his site on the
Setup > Other Software page.
--
PapaJohn
To do true PIP and with the ability to move the insert picture around
the frame you should look for the free version of MovieXone...its often on
the cover disk of publications like PC Utilities. The program also allows
movement in a 3D space for the insert picture....its really rather
clever...and free.