ok...gots lots of info for you...hope you are ready:P
a) Both people should get a fast 'broadband' internet connection either DSL through your phone line or Cable modem. The most important thing is the upload speed which is usually the slowest speed compared to the download speed that is typically much higher. Try to get as high of an upload speed for both people as possible. Qwest (portland area) has a 896 kilobit upload speed DSL service, and Verizon (portland other areas) has a 768 kilobit upload speed DSL service. Even if you can't get one of those, try to get the best possible for your locations and budgets -- 384 kilobits, 256 kilobits, 128 kilobits, whatever the best upload rate possible is.
b) If you can get a 'static ip address' for one or both of your internet connections that's preferable, but not absolutely necessary. You just want to be using a webcam service that will "directly connect" your two cameras without all of the video data going through a server, so having directly connectable static ip addresses would possibly help there but it's OK either way. Usually this is offered as an option with some Internet providers.
c) Get a good quality webcam -- at least VGA resolution, 640 x 480 (300k pixels) or better. Get one that has a CCD sensor instead of the cheaper and lower quality CMOS image sensor chips. Don't buy one of the cheap-junk webcams with "QCIF" or "CIF" 320x200, 160x120 resolution, CMOS sensor, etc, they will not be clear enough for signing. Also get a webcam that can send 30 or 60 frames per second at 640x480 resolution in color, nothing less. If you want you might look into ones with auto-focus but that's not necessary. If you have a good digital camera or camcorder it may be possible to use it on AC power and use it as a webcam either directly or if you hook it into a "video capture" computer peripheral; either way you'd probably get good quality video
if the camera supports video-out or 640x480 webcam digital capture mode.
d) Set up your webcam locations carefully, you want to be lit evenly with diffusely even but fairly bright lighting, without substantial shadows or "glare" spots over your body. Also you want your signing area in space (around your torso etc) to have a very plain backdrop, ideally just a solid color like a light colored wall or hang up a sheet / tapestry / backdrop etc. so that it'll be very visble in contrast when you're signing and the computer won't have a lot of color / texture detail to also send over the connection so that all the transmission quality can be used for your actual signing and movements.
quixoticvegan: e) Use a good webcam or video-conferencing piece of software that can do a good job of high quality motion video conferencing over the internet. Most things like yahoo messenger, ICQ, MSN, etc. aren't really designed to give the high quality for high detail high speed video that's best for signing. Look at something that will be able to establish a "direct connection" between your computers for the actual video conferencing data, and something that supports 640x480 resolution highly compressed video at as high of a bit-rate as your connection permits.If you are using software compression for the video (unless your cameras or video capture hardware can do it "in hardware") then you'll probably both want to use reasonably modern PCs, e.g. something like Windows XP with a Pentium III or Pentium IV CPU at 1.7 GHz or faster speed, 256 Megabytes RAM, or better. USB 2.0 High speed ports may be advantageous if your camera / webcam / digital video capture hardware supports USB 2.0 High Speed. Some video capture interfaces (e.g. to digital camcorders or on some Macintoshes etc) use Firewire / IEEE 1394 interfaces.
If you can do all these things then you'll have equal or likely better quality to what you can get at a "video conferencing" meeting center or from a consumer oriented "stand alone" "video phone" product, and you'll save money over paying hourly rental rates for videoconferencing stations and paying for expensive and feature / quality limited dedicated "videophone" devices.