Sounds like a job for the Videomerge effect!
Just right-click on the clip and select Videomerge. You can fine tune the effect by selecting Edit Effects.
Of course, this video should be on the Video 2 track -- with whatever you want to use as its new background on Video 1, right below it.
I tried that. it takes away some of the black pixels...but the image must not be pure black. so unfortunatley Video Merge doesn't work on this one (like it has on other video's I've tried!)
Depending on the exact subject matter, one could also use Track Matte Keying to limit the area of the Clip (Video Track 2) and adjust the Opacity.
Steve's method would be the first that I'd look to, because it would be easier, provded that it works for the subject matter.
Well, ideally Videomerge, like Chroma Key, applies transparency to everything that's a certain color. That's why Chroma Key is usually applied to people standing in front of a very bright green screen -- so that you only key out the background and not remove any of the stuff you want to keep.
But if you've got a black background and black in your foreground, you've got a challenge!
You can try applying and shaping a 16-bit garbage matte, but it's going to be a lot of work to apply it and then to use it to follow the action.
In short, if you're going to remove the background in a clip, you should probably think about shooting it with a background that's easy to remove.
As Steve says, the feature is pretty dependent on the content of the video. I have Premiere Elements 8 (and feel good to have it too.. ) I asked my friend to stand in front of the Really Red curtains I have at home and shot his video. Dragged this video to the timeline and I was asked automatically that something in this clip can be edited. Turns out, the background can be removed straightaway.
In this feature, the content looks to be split into foreground and background. And then background can be removed/replaced etc. Try doing what was earlier suggested. Shoot with a distinct background where the lighting and/or the scene behind the object under focus has a distinctly different color.
Hopefully this is what you are looking for.