Decode as in PAL > RGB (by the chip under delayline), as encode is RGB to PAL (which is done by that Sony chip). The chip under the delayline is likely some late 80s/early 90s color TV video processor where all the bandpass filters and whatnot were all external as the support circuitry seems to show and of course the 2x PAL color frequency crystal (2 * 4.433619MHz) . I'm definitiely curious about that chip.
EDIT: I have a thought what it may be, it could be one of those titling things, which explains video input but no actual digitizing of it. It can insert new video into a stream that is fed into it and output it on the next connector. So input is decoded from PAL to RGB (to avoid rainbow artifacts on forceful entry on new video), digitally generated RGB video is mixed into it and then encoded back to PAL for output into whatever is down the line (video recording device perhaps).