I obviously really don't understand bit coin... So, if I want to use it to transfer money to another person, I guess I buy some bitcoinage using my everyday currency, and then to use it, the person I send the bitcoins to converts to their local currency. If that's not wildly wrong already, who / how is the currency conversion rate determined when dealing with bitcoins?
Yes, somebody could use bitcoin to transfer wealth just as you described. How the currency conversion rate is determined is by supply and demand, just like any other thing that people buy. If lots of people buy bitcoin, demand increases, and vice versa. Price fluctuates based on changes in demand. The supply increases slowly and steadily from mining. So the exchange rate isn't determined by any one person or party, it's determined by the behavior of anyone selling or buying bitcoin.