Record and stream what's on my screen
It is unlikely that you will be able to do that.  To stream a high quality video over a home Internet connection is going to take a LOT of complex compression.  Compression is both memory, CPU and possibly GPU intensive and running a game is also CPU, memory and GPU intensive.  This is why the files that FRAPS produces are so massive.  They apply minimal compression to make sure that it doesn't have more of an impact on the game than necessary.

What you could do is play the game, record the video portion, compress it (possibly to a really low quality version so that you can stream it quickly), stream it and record both of your dialog, then mix the dialog back with the higher quality version of the video.