Seems like few are really answering dudes question, I don't think he wants to know 'live or multitracked:what's your standpoint?'... but rather some pointers to get started.
I'm a proponent of the live thing, just because I mix out live. But to do a multitracked mix, think about each new element (track, scratching, adding a sample, whatnot) as a new track and you can arrange each to each other.
Start with one tune at a certain tempo and that basically becomes the set tempo for the mix.
Now let's say you want to add another song. Play back the original song you just recorded while beatmatching your new song to it. Once you are satisfied with the tempo match, hit record and bring in that song while recording it. At this point you don't have to really fade in or out, just match the tempo the whole time (If it's a hip-hop or non-human drums this should be a breeze). Now play back both (should be two different tracks). the second track will come in abruptly and end abpruptly. At this point you can go in and draw in a volume curve to the track to fade in to your taste (just as if you were raising the fader on your mixer). you can also fade out the first track as the second comes in.
That's the basic gist behind it. Just keep beatmatching the new song to the last one and it will be seemless. you can add complexity with delays at the end of tracks as the go in to others, or extend certain bars, etc. etc. the possibilities of tweaking are endless.
As for scratching, once you have the tracks (songs) pieced together, you can add another track and just scratch on top (while recording the scratches to this new extra track) as it plays out. use the same basic philosophy to tweak this track in relation to the others. You can adjust the volume of each track if one is too low or high at this point.
When you are done, just output the mix as one track and there is your mix.
this is a basic outline, you can add on this with varying complexity, but hopefully has helped a bit.
