It works just fine. No different than if you were across the street (it seems).
Painkiller - who I've been working with for the last month - is in the Netherlands and I'm on Phoenix. It's as if he's in the other room.
And I can confirm this! At this moment we are using Skype for the connection (Skype is freeware and free to use between Skype users). Video and audio quality are good. Almost no delay or distortion. And I don't even have a very fast internet connection!
The lessons are very good. YT knows what he is talking about and is good in explaining. I'm a beginner (playing the drums for 6 months now) and I've learned a lot already. After each lesson I got a pdf by email with the summary of the lesson, so you can practice. With any questions you can email YT.
So for me, I'll stick to the lessons once a week!