Dear Sunil,
As you mentioned Alt-ref frame is not for display and hence can be synthesized in anyway the encoder feels is the best. The reference encoder synthesizes alt-ref frame by looking into a set of past and future frames and temporally filters them to generate one. Since the alt-ref frame encoded and transmitted like any other frame in bitstream, decoder can decode it and use for reference.
How encoder generates alt-ref frame is completely dependent on the design on encoder and standard does not specify it.
Thanks and regards,
Rajesh
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Rajesh Pamula
Post Graduate Student
Analogue and Digital Integrated Circuit Design
Imperial College London.
Residence Phone:
+44-20-78522056