MacDaddyWorld claims to have developed a two-way video conferencing application as part of a programming contest at the C-4 developer's conference.

In order to overcome the minor issue of the iPhone's camera pointing the wrong direction, they reworked an existing periscope mirror for the MacBook.

Unfortunately, details are limited and no downloadable source or application is currently available, but could be an interesting (albeit impractical) hack.

Related Forum: iPhone