Derlukee made me poke and prod around some more to see what happens.
On the mac side:
Facetime = nothing but connect camera screen
Messages = completely blank
Contacts = my regular address book, shows myself as capable with facetime video & audio
On the iphone side:
FaceTime myself = rings on my mac, but can't do anything
iPhone, Contacts, FaceTime Audio to myself ==> I get an answer / decline screen on FaceTime app on the mac! Just like derlukee showed.
So, it actually can work.
What happens however, is whenever somebody FaceTimes me, it typically is video, the mac rings and you can't do anything.
I don't get the option to receive video and answer with audio. (one-way video, two-way audio)
Nor have a fallback to two-way audio.
On the mac, you can't iniate FaceTime to anybody (like call back a missed call) from within the app. Unlike how it works on the iPhone or iPad.
Now my FaceTime icon is stuck with a red (1) on the dock? No way to clear it.
Guess I'll have to try FT from my contacts list, as my messages is completely blank.
Double check if anything else suddenly works.
So thanks, Derlukee. I've got it partially working.
Still seems like a half baked attempt from Apple though.