you definitely need a VTC system. Cisco, Lifesize, Polycom, etc. the most cost effective i know of is the Express from Lifesize. there is no way to do this over skype properly. obviously, it would probably work fine in the interim, also, since it is an interim solution why doe it matter if it does go out to the internet and back? surely, their internet can handle a single skype session for a week or two.

I also read that Skype has to make it's way to the net to authenticate via Skypes servers and also pickup encryption algorithms.

Maybe Skype won't work on a LAN... interesting. Never tried myself.

 I also sort of see this temporary setup as a 'proof of concept' (not as if VTC is brand new or anything :rooleyes). They will need a permanent solution that they can have ready to go anytime an elevator fails or whatever. 

I really don't know the ins and outs of their internet bandwidth, but I think its only about 6.5 down and has to support the ENTIRE campus of teachers and students (not sure how much access they give to students). 

Can anyone PM me where to source VTC equipment/systems? Having never done one, i'd prefer to just partner with someone that does, as I won't know what needs to be educated to the client.

Ok, I talked to Cory and basically the best description is that by law the student has to have access to the education being given at any time. If the elevator breaks down or in this case gets red tagged for repair then the student needs to be able to access the classroom from a handicap accessible area such as the library on the first floor.
The kicker is that this call came in Thursday evening and needs to be up and running by Monday since school is starting in this dilemma. His solution is a PTZ camera cart with audio that will be accessed by the student over the LAN and a second return video cart that will be accessed by the teacher. At most this system will be operational for one to two days at a time in cases where elevator repair is needed.
Getting parts had to be local due to the timing and the install had to happen over the weekend. I give props where props are due. I think the solution he has come up with in the limited time he had is great.

 So far everything is working good and we are getting good feedback. We are basically just using the dvr recording software that came wi the ip cams as an interface for viewing.

The only drawback is that with the mic on the camera for the student, if anyone else is I'm the lab talking it picks up and may interrupt the teacher.

My idea was to just setup a separate chat for the audio and give the student a regular set of commuter headphones with mic. And a table top USB mic for the cart with the teacher.

So, does anyone know of a local network video char or VoIP type service? I've found a few beta, half baked options, but nothing really good yet. I'm not sure if there is a way to run teamspeak or something similar on just a local network.

They have started discussions now on getting a solid conference solution in place, but this will rarely be needed as I'm sure the elevator will be functioning most of the time.

They do really like the ip camera on a tripod, ao easy to move. Every new classroom has a computer connected to a projector and IC speakers. They really like the idea of keeping students in a couple classrooms and being able to just pull up an ip address and share the presentation across a few rooms.

Mobotix have SIP clients which could suffice for your case

[Link: google.com]

this says you can use their pc software for video and "lip synchronous audio" p.55
[Link: google.com]

Is this your suggestion for the voice chat solution?

it's for video and chat. mobotix are ip cameras with voip capabilities built in.