The video, taken by O'Hear shows him accessing his own privacy settings - ironically - through the site, and previewing how his profile looks to his friends. With this, it allows the live chat under way to be viewed by that person.
TechCrunch rightfully notified Facebook of this issue, and all Facebook chat users will notice that the service is down due to maintenance. The presumption is that Facebook is trying to fix this issue, yet no word from them on this. No doubt they are trying to fix it before even more media outlets cover this shocking and gross breach of privacy.
Frankly, I truly hope that soon the authorities investigate the site for reasons relating to content and breaches in privacy. I am utterly appalled and disgusted that this could even happen - let alone be reproduced so simply using their own in-house privacy settings tool.