NIGHTWATCH: NSA Exploit of the Day

Today's item from the NSA's Tailored Access Operations (TAO) group implant catalog:

NIGHTWATCH (TS//SI//REL TO USA,FVEY) NIGHTWATCH is a portable computer with specialized, internal hardware designed to process progressive-scan (non-interlaced VAGRANT signals).
(U) Capability Summary
(TS//SI//REL TO USA,FVEY) The current implementation of NIGHTWATCH consists of a general-purpose PC inside of a shielded case. The PC has PCI digitizing and clock cards to provide the needed interface and accurate clocking required for video reconstruction. It also has:

• horizontal sync, vertical sync and video outputs to drive an external, multi-sync monitor.
• video output
• spectral analysis up to 150 kHz to provide for indications of horizontal and vertical sync frequencies.
• frame capture and forwarding
• PCMCIA cards for program and data storage
• horizontal sync locking to keep the display set on the NIGHTWATCH display.
• frame averaging up to 2^16 (65536) frames.

(U) Concept of Operation
(TS//SI//REL TO USA,FVEY) The video output from an appropriate collection system, such as a CTX4000, PHOTOANGLO, or general-purpose receiver, is connected to the video output on the NIGHTWATCH system. The user, using the appropriate tools either within NIGHTWATCH or externally, determines the horizontal and vertical sync frequencies of the targeted monitor. Once the user matches the proper frequencies, he activates "Sync Lock" and frame averaging to reduce noise and improve readability of the targeted monitor. If warranted, the user then forwards the displayed frames over a network to NSAW, where analysts can look at them for intelligence purposes.
Unit Cost: N/A
Status: This system has reached the end of its service life. All work concerning the NIGHTWATCH system is strictly for maintenance purposes. This system is slated to be replaced by the VIEWPLATE system.

Page, with graphics, is here. General information about TAO and the catalog is here.
In the comments, feel free to discuss how the exploit works, how we might detect it, how it has probably been improved since the catalog entry in 2008, and so on.