I'm in the process of designing a milk frother. Does anyone no the ins and outs of how this works? I want to send steam through 2 venturi's, first one to induce air (for froth) and the second to induce milk. The steam will heat the milk, but I'm worried about the pratical implication of this. will it take enough milk in?

I don't have the necessary experience to confidently answer your question, but in my experience it does sound like that will work. If I'm not mistaken, I believe that most automatic milk frothers (or cappuccinatores) use that same theory. The few that I have seen before, usually have a few knobs to adjust the amount of air and milk that comes in.
One thing that I'd suggest is looking at a few US Patents on the subject. They often have very useful drawings of the insides of machines. One that looks promising is at: http://www.google.com/patents?vid=USPAT4960042

-Ben