Last weekend I have tried the project in the following webpage and it works beautifully on my TV. What you'll need is an AVR and a 17.734475MHz crystal and a couples of cap/resistors and that's all.
Basically the software generates the sync pulses, the color burst and the chrominance color carrier, using 5-bits R-2R DAC of an output port.
There are the original version by the author along with the source codes on the website and and a much improved version at the same site too.
I have modified the original source code a bit to use a Tiny2313 and to give me two toggling picture of color bars, the original one and the one that has pink and green bar on it. So in all you'll have three choices of object code to place into the AVR. My modified version is available as attachment to this post.
In UK, the Tiny2313 AVR is available for sale in Rapid electronic for £1.05 and the crystal for £0.30. So you can build an interesting project for less than £1.50. Can't get any better than that.
Remember you'll need the 20MHz version of the Tiny2313, though it is easy to adapt the project to any of the larger AVR family.
Very clever project - but really naff colour bars!.
I built one using a PIC years ago, but used an RGB to composite chip to generate the colour signal - I think it came off an Italian website?. The encoder chip was the standard one found in lots of home computers.