Say I have some program which takes input from an audio recording device; for example a VOIP dialer. Now I wish to apply a sound effect from a VST plugin to the input device. It seems to me that a sensible way to do this would be to have some VST audio program take input from the mic device, apply the sound effect, write the output to a virtual audio device and have the end program read from the virtual device.
If this seems like a logical way to go about the problem, how do I go about creating virtual audio devices in Windows 7, and what VST program would allow me to read live input audio, apply an effect, and write it to the virtual device? For the latter, I assume there would be many programs capable of this, but I would appreciate a recommendation.