How do I video conference with iChat?

I've been using iChat for video chats too and you're right that it's not quite as obvious as it could be, because the program is fundamentally written for text-based chats.

Here's a tiny snippet of my iChat AIM buddy / contact list that shows a number of friends:

Notice here the different green status icons. My friend Wesley ("ChimnySweepNOLA") has audio, but not video, for example, hence his having the little telephone icon. By contrast, Stepan ("smazurov") has neither audio nor video capabilities, so he has no green icon at all.

Kevin, however, who is not active (hence the red blob rather than green), has video capability, which is why he has a tiny video camera next to his name.

To start up a regular text chat with someone, regardless of their media capabilities, simply double click on their name. For example, I double-clicked on Wesley's name and promptly launched a chat window:

Double click on the green phone icon, however, and you'll see something entirely different happen:

Once the audio chat is accepted, it looks like this:

(the green bars show that I'm actually talking as I take this screen shot)

If you're guessing that double-clicking on the green video camera starts a video chat, you'd be exactly right! Here's how that looks:

The message "waiting for response" vanishes once the other party accepts your connection, of course.

There's also a second way to initiate audio or video chats. Click on the name of the person to whom you want to chat, then click on Buddies:

Now you can choose "Invite to Video Chat" or "Invite to Audio Chat", as desired. If you don't get those, by the way, it's because you don't have that capability. If you do, you'll find that you can start a one-way audio or video chat with the other party if you're so inclined, which is pretty cool.

One more: if someone wants to audio or video chat with you, you get an invitation request, like this:

or this:

There. I hope that clears up how you can effectively use iChat for a variety of different media chat options.