OK, so that was weird... (*See my comments above - pulling it apart and wiggling all the connectors didn't work, nor for that matter did SMC reset)....
However, some weeks later I came back for one last try:
- I tried to boot in Safe mode... wouldn't boot..showed a circle with a line across it.... then shut itself down.
- Powered it up again... opened FaceTime... "no camera connected." Darn it.
- I booted up my old Windows XP installation in VirtualBox, and since iSight was listed in USB devices, I went to "devices>USB>iSight" and tried to attach it to VirtualBox. It wouldn't, Windows acted as if it didn't exist. so shutdown VirtualBox.
Then lo and behold.... opened up Photo Booth and saw my surprised reflection... and a little green light. Then I'm fairly sure I heard/imagined a hallelujah chorus.
Its a bit blurry... might have to pull it apart and give camera a wiggle... or might not risk it....
But I share this in case someone on the internet has the same weird problem that I did.