"Can that be done in software?"
Nice writeup and excellent suggestion for faking a handheld camera. It's been a while since I've played with Adobe Premiere (the video editor), but I recall that it allows you to do "pan-n-scan" to select a subset of the image and to move the viewport around along a trajectory. I'd be astounded if there aren't plugins for Premiere that simulate handheld camera jitter. Rob's obviously current with Premiere or another editor, so I'd imagine he'll translate your description into reality in a trice.