Originally Posted by TrueBassist

Put the video onto the timeline so it shows up on the Preview Monitor (right hand monitor in Premiere Pro CS3). Double click on the video on the timeline and it should appear in the Edit Monitor (left hand monitor in Premiere Pro CS3). Click on the Effects Controls panel above the Edit Monitor, then on the motion button. Uncheck the Uniform Scale box and then scale down the video on the Preview Monitor to whatever size you want.

Do the exact same with the other video you want to use but move it across to the other side of the Preview Monitor so you can see both videos at the same time.

Hope this helps.