Dude, I did this. Do a search for my video of The Black Crowes song "Horse Head".
I used a regular camcorder to record the video and then Apple's Garage Band to record my audio with the built-in mic in my MacBook Pro. Then I layered the actual song from my iPod on a second track.
It was a bit tricky to sync the audi & video in iMovie, but it really wasn't bad at all to do.
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