Here are the two methods I have used with success:
Find an old movie (preferable B&W) that has some blown out leader in the begining or end of just grainy film (I believe the Criterion of Fritz Lang’s M has some at the end). Take that into FCP and do a luma key on the white. Loop that keyed grain over your vid and you will have a really unique degraded film look.
Compress the video footage to a really low rez scheme (360 x 240 flv for example) then up convert that low rez video back 720 x 480 SD. So much information will get thrown out that the video will degrade severly. Then add the CGM film grain effect over it. I used to have a video online that I used this process on, it looked great (because it looked so beat up).
If your client wants it to be real messed up you can always just take 8mm footage of the video playing on a monitor. Not that expensive, but you may have to do it a few times to get it right.