How Does it work?
This is clearly the most complicated extension I have ever developed. Google Hangouts uses Google Wave Gadgets from Google Shared Spaces. This extension taps into the wave technology directly and intercepts all the messages and has a basic API that the extension developer can send messages back to into the wave.
Download the extension!
Note, this is just a technology preview, I bet it is 99% buggy but it works :) Install from the gallery: https://chrome.google.com/webstore/detail/kdeeabahpojjdkhocdedhfcldgegnmcc