My guess is it's a fairly simple signal, but rolling a circuit to generate a modulated 3.27mhz signal would probably be quite a bit harder than spending $25-30 on the DCS-RC which already knows how to generate the signal.
JGL, in my case, the watchdog signal is just impressed on the yard tracks, so it's a moot point as far as bandwidth. As soon as you drive out of the yard, you're on a different channel.
