I have the JabberApplet working quite nicely on several of my 1.7 sites. Here are the steps to follow:
Install a jabber server on the same system that is running Tiki.
Get the JabberApplet and put it in a new directory called jabber under lib.
Create a Wiki page in your site with the folowing code in it:
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Note by luci: applet tag is deprecated in favor of object in xhtml 1.0, in xhtml 1.0 transitional attributes must be in lowercase, there's no attribute viewastext, there's no applet tag in xhtml 1.0 strict
Put the domain name that the jabber server is using in place of yourdomain.goes.here (it must still be in quotes).
When a user views that page, the Jabber applet will start and they will be prompted for login info.
Discussion/participation
I (dheltzel) just setup a Jabber server to run some of the same domains that I run Tiki on. Jabber sure has a lot of name recognition in the OSS community. It seems to work pretty well. too.