iMac: Running Hot with iSight camera turned on?
It's normal that your laptop got heated that much. It's not because of the camera, actually. Even if you'll switch to external web-cam, you'll still have this effect.

The CPU is being heated because it has to process really heavy thread of video data, to encode and to process it on the flight. 

I have this effect on my laptop as well, especially on long skype meetings or when using other video processing.