My proposal is to only input video from the Iphone and just have the computer video going to nothing. This setup may need a RGB to VGA cable to work properly but without having any of the needed equipment or money (finishing my last days as a student) I can't test to be sure.
A cable like this may or may not work. It depends on the resolution the Iphone is sending out. Do you think that software can be written for the Iphone to change the output resolution? If so this looks like it would work.
Now if someone has a 8-9" touch screen they would like to send me or sell me super cheap I could try this out.