I have been having a lot of fun with Ustream.tv. It is a little like YouTube, but you can do a live broadcast. Yesterday I was broadcasting the work that I was doing on a school project with Son #1. We were making a miniature catapult (they are studying the middle ages). Some of my students saw the link and watched us online. It was interactive, the son was learning, and everyone was having fun!
I have been looking for a live video service, and I think that Ustream.tv is the right one. Here are a few of their features: Live Broadcast (obviously), record your broadcast for playback later, put text on the video, put video on the video (choose any video from youtube... and it can be picture-in-picture or you can make it take up the full broadcast screen), you can poll the audience, you can embed the video on another site (like here), and you can even password protect the page so that not just anyone can see it.
There are several other features, but I don't have time to get into them all. Check out Ustream.tv and let me know what you think.
You can also check out my "channel" by clicking here. If you're lucky, I might be broadcasting when you check it. If I am not currently broadcasting, you could always click the follow button and it will let you know the next time I schedule a "show."