Yes. In fact, I show you this very trick, step-by-step in my new book!
You use a picture-in-picture effect, with one video on a track above another.
Your TV and room on the Video 1 track; your news feature on the Video 2 track, directly above it on the timeline.
Then you just size and position the video on Video 2 to look like it's playing on the TV.
thanks a lot! That's great. I will try it.
Are virtual sets included in premiere elements? I did not find anything until now.
No. Version 8 of the program includes over 100 pieces of clip art -- but no "virtual sets" are included.
You might have luck with Google, for terms like "news set," etc. Also, many news channels, like Fox, have footage of their sets on-line. You could do a Frame Capture/Export of just the empty set, and then Import that TIFF into your Project to be placed on Video Track 1 and extend the Duration as is needed.
Interesting idea. I will try ...