Twitterchat was sent over to use for review. I am glad we had the chance to see it and tell you our thoughts. The tool itself allows you to create a small embeddable chat box that offers realtime communication. There are plenty of tools out there that do this across proprietary and other IM systems. With the Twitter integration it does reach a different audience.
You are prompted to create an account on their system that exactly matches your Twitter account. Username, password and email address. This worried me right away and raised a flag why they were not using oAuth. Why would I put my exact Twitter credentials in it? However, there was a warning on the page you should not ignore. It says to not use your primary account since it could then pull all of your private messages as well. You are to create a new account to use. This in effect defeats the entire purpose to me.
Direct messages seems to drive how the communication is done. There was no good help files, no good About page and no information on reaching the developers. Here is their actual account and chat box embedded for you to see a sample:
Filed under: Add-on Tools, chat, instant_message