How to use iSight webcam without activating the green light?
"iSeeYou: Disabling the MacBook Webcam Indicator LED" is a paper by Matthew Brocker and Stephen Checkoway from the Johns Hopkins University. In this paper they explain on how to disable the LED when using the camera. In short: normally you use the CPU to access the camera and activate the LED, but you can also use the processing unit in on the camera board itself and this will not activate the green LED. The authors also provide software to protect you against these problems.

iFixit had the same question and their answer was also based on the same paper:


  according to the researchers, the vulnerability they discovered affects “Apple internal iSight webcams found in earlier-generation Apple products, including the iMac G5 and early Intel-based iMacs, MacBooks, and MacBook Pros until roughly 2008.” While the attack outlined in the paper is limited to these devices, researchers like Charlie Miller suggest that the attack could be applicable to newer systems as well. “There’s no reason you can’t do it -- it’s just a lot of work and resources but it depends on how well [Apple] secured the hardware,” Miller says.


In short: Yes, the iSight can be used without green light as it is not hardwired.