How to interface camera to an atmega328 with bluetooth?
You will need a much more powerful processor and most likely external RAM (so get a MCU with an external memory bus for easy integration).

As you have mentioned, RAM for a single VGA image is hard to come by, especially without external RAM. 

Another thing is the speed and type of communication to properly stream video over bluetooth will be far too difficult/impossible for a ATMEGA328 to do. 

I suggest you go for a STM32F4 discovery board or similar development board and learn how ARM Cortex processors work. Make sure the processor on board has a full external memory interface or has enough built-in RAM for at least a single image. 

On some of the more advanced ARM Cortex M3/4 systems, using DMA (Direct Memory Access) you can very quickly pipe data from one peripheral to another, and this can allow for image streaming with little to no effort from the processor. you can read more about it here. 

Using DMA for example, you can take data straight from the output of the camera (parallel data bus) such as an OV7670 module, and pipe it straight into RAM and set a flag which the processor can then deal with (like sending that data off to a bluetooth stream output)