Hybrid chips containing both CPU's and FPGA components promise the potential of providing a unified platform for seamless implementation of hardware and software co-designed components. Realizing the potential of these new hybrid chips requires new high level programming model capabilities that support a far more integrated view of the CPU and FPGA components than is achievable with current methods. The KU Hybrid Threads project has been investigating extending the familiar multithreaded programming model across this CPU/FPGA boundary to support both FPGA based hardware and CPU based software threads. Adopting this generalized multithreaded model can lead to programming productivity improvement, while at the same time providing the benefit of customized hardware from within a familiar software programming model. In this paper we present an application study of our hybrid multithreaded model. We have implemented several image-processing functions in both hardware and software, but from within the common multithreaded programming model on a XILINX V2P7 FPGA. This example demonstrates hardware and software threads executing concurrently using standard multithreaded synchronization primitives transforming real-time images captured by a camera and display it on a workstation.