Cool! How low resolution? Would the shield itself be able to directly output to a screen without going through the Arduino, too?
Technically, it's all thru the Arduino, since it is making use of a modified version of the TVOut library; the image data itself is stored in a RAM array on the Arduino itself (which means your program can only be so complex - it would be a better bet to have one Arduino acting as the video processor, and a second communicating with it over a serial link to act as the main processing system).
As far as resolution - I can't recall exactly, but if you research those links (and/or contact Nootropic directly - send him a PM, he's on this forum all the time), you should figure it out (192 x 128 or less, 1 bit-per-pixel, something like that - its modifiable in the software library, IIRC).