Well, when you break it down to single products, what you have is:
(Camera -> Controller Board) -> Transmitter -> Receiver -> (Controller Board -> Screen).
Camera, Controller boards and Screen are digital
Transmitter and Receiver are analogue.
The blanking comes from the RX giving the screen too mangled analogue signal, and when the controller board tries to change it to digital data for the screen, it fails and goes in to a 'fail-safe' mode and displays just black or blue.
So the fail is in the analogue -> digital conversion, and the best solution for that is a really good signal quality, or having the conversion happen before the screen, either by the RX or a separate device.
Of course, different screens can handle different amounts of interference, so even a low quality signal can work with some screens.
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The iPod screen reminded me of the terrible MyVu iPod video goggles
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http://www.amazon.com/Myvu-Personal-Med ... B000W9OJVA