I've heard of death by a thousand cuts, but never cursors--that was until Firefly, a less-than-practical approach to letting your site visitors communicate with one another in real time. The service lets everyone see each other's cursors live as they zip around the page and lets them chat with one another via text. To strike up conversation, just start typing and a chat bubble will form above your cursor. Everyone's public chats are stored in a little queue, and frequent users can register to have their information and chat history saved to view at a later date.
One of the service's greatest assets is that it's highly engaging when you've got a good small crowd together. However, I can see it getting totally out of control when more than about 10 people are on the screen at once. The little bubbles dissolve after just a few moments, and you're left with whatever the chat history catches--not exactly user friendly if you're trying to keep up with several chats at once.
Like some of the distributed commenting systems that have popped up over the past year (see Disqus and Intense Debate) Firefly requires the site administrator to install it. The service is in private beta for now, but you can sign up to get it on your site here. Tech personality Leo Laporte has it installed on his Twitlive page, where there were about 70 people using it when I came by about a half an hour ago. Many just had the page open and were not chatting. To see it pitched by creator Billy Chasen (without a working demo) you can also check out Centernetworks' video of it from the NY Tech Meetup this past Tuesday night.