Here’s a interesting Windows Phone App from the XDA Developer forum user that shows how to stream their Physical Windows Phone Devices to PC via USB or Wifi .
This is a HomeBrew App and can be installed to the Windows Phone if the device is Developer UnLocked .
There are 2 App one to be run on the PC and other to be installed on the Windows Phone .
You can configure the IP Port and then start viewing your Phone on PC live .
Here’s the video where the user demonstrates the tool
Download the WP7 Screen Recorder here