I just returned from a trip including a large stop in Shanghai (and incidentally had my Chinese wedding - that was an experience). I'd been studying reasonably solidly before leaving, evening completing the extreme challenge, but it was mostly all done alone. Listening to Pimslur while walking to work, skritter in the evenings and looking at my wife's old textbooks when I had a free moment. One thing that's clearly lacking though is actual conversation.

I think it really showed when I was in China - apparently everyone understood what I said, but I had no idea of what they replied with. Even words like 吃 in shanghai (or at least my in-laws) say it like tsi or something, no ch sound at all - I got very confused. So I'd love to start talking more. My inlaws are super nice, but haven't shown any interest in helping me learn mandarin so the internet is my next best option.

I've seen a few sites around like Livemocha that hook you up with people learning your native language and I'm wondering if a) has anyone tried them? b) is it useful? c) is it worth it when you only know 300ish words so your out of conversation topics in 2 minutes flat?

If you're being understood but having trouble understanding others, in addition to finding language exchange partners online, you might want to increase your exposure to recordings of natural conversation. At the three hundred character level this probably involves going through all of the newbie and elementary lessons on ChinesePod or similar - and listening to the dialogue only mp3s on a rolling basis for review (without the explanations or transcript!).

In the past I've used online Skype lessons which were reasonably priced, in the €10/hour range for a 1-on-1 session with a proper teacher and following a good book; intensively at 10 hours per week for a couple weeks before landing in China. Although I didn't keep renewing (time constraints once back home) I did find it really helpful and ease the transitional time which always occurs when one has been away from China (or an immersive environment) for an extended period of time.

You might also want to try ChineseTeachers.com:

http://www.chineseteachers.com/