After a couple of hours of messing around with the settings, this is what I got. Next I need to experiment with a green screen and filters.
I'm using a Logitech C722 Pro camera, Rocksmith is in QHD resolution, camera capturing 720p 60fps. Need to disabled "audio exclusivity" in both Rocksmith and Windows sound devices for it to work. A 5 min recording is about 700 MB, and you need a relatively decent computer to do it. I'm doing it on an HP Zbook with a quad core i7, 32GB RAM and Quadro GPU, seems to be working ok but I saw occasional stutter in the video. Not sure why as my CPU is barely doing 50%, and the GPU is around 65% utilization.