I am not quite sure I'm understanding your aim correctly, but your first proposed setup should work. However, using the mouse will probably not be enough (I don't do this myself, so I haven't fiddled around with it too much); I think you need to use a keyboard too. That said, the PVR-350 comes with a remote that works pretty well.
Another thing, if you plan on using only the TFT to view things on, the PVR-350 is overkill. It has a hardware decoder, but that can only be used for the 350:s tv-out. If TFT is your choice, you might as well get a cheaper card (pvr-250 or 150, for example).
I'm not always right
Accent HT-400 Case, AMD Athlon 64 3800+ 1024MB, 1TB+300GB+180GB, WinXP Pro-SP2, NVidia 7600GT
Nova-T USB2, PVR-350 recording from Dilog 355 DVB-T box, USB-UIRT (receiving & transmitting)