Thanks 2 everyone for their input, it's all very helpful:)
So what about the whole visa thing, will I or won't I have to fly to Korea if I come on a tourist visa and get sponsored for a work visa? I've read a lot of conflicting things about this as well.

It all depends on how soon you can find a job. It can take weeks for a work visa to be processed, and if it isn't ready before your tourist visa expires, you will have to leave the country and return with a new tourist visa.

In the past people used to take the quick ferry to Korea when their visas were about to expire, spend a couple days in Korea, and then return to Japan and get a fresh tourist visa. But Japanese immigration has cracking down on that practice. In most cases you will probably be given a second visa, but it's not a sure thing, and, if you don't find a job within the second 90 day period, you probably won't be able to get a third visa. A lot also depends on which country you are from. If you are from America, the UK, Australia, or Canada, you'll probably have no trouble getting a second (or even third) visa. If you are from anywhere else, you may not be so lucky.

To get a work visa, you must be hired by a school/company. They'll provide you with a sponsorship form which they have signed, along with a work contract which is usually for 1 year. You will take this paperwork, an original copy of your university diploma, along with your passport, and 2 pictures of yourself to the immigration office in whichever prefecture you are living. If the paperwork is in order, you will pay a fee, and the immigration officer will affix a stamp in your passport which says that your work visa is being processed. You'll fill out a post card with your name and address on it. When your visa is complete, the postcard will be mailed to you, take it back to the immigration office and collect your visa.

If you are hired from overseas the process is much easier. Some schools will interview you by telephone, so you will not need to travel. If they hire you, they will mail you the forms to fill out. Fill them out and send them back. After a few weeks, they will return your passport with a certificate of eligibility. You will then take (or send) your passport and COE to your nearest Japanese consulate or embassy, and they will make the visa for you. When you land in Japan, a 1 year stamp will be affixed to your passport.

Here's another question:) (BTW I love the internet, this is so cool that I can ask these from thousands of miles away and people actually answer them! Thank you Al Gore, lol)
So if Tokyo is such a saturated market, and since I unfortunately don't know s**t about most other cities/areas in Japan, any suggestions on where I might like to live and work besides Tokyo? Are there areas within easy traveling distance to Tokyo where the market is better? Are there other metropolitan areas that teachers consider a good second choice? I realize that opinions will differ on these matters, and that Tokyo is Tokyo and nowhere else is really like it. Just fishing to hear people's thoughts on the matter.

You also used to be able to wait for your COE inside the country, and then get your tourist visa changed. I had an easy time getting three consecutive tourist visas, but immigration decided two weeks before I got my COE, that I could no longer do the change. So I ended up going to Korea to have it switched. Now this isn't even possible at all. Everyone who has come in after my as had to follow the the method above in the last paragraph. No more hanging out in Japan to do the paperwork. You must arrive, the first time, with a visa.

Hold on now. Are you saying that no one with a tourist visa can get a job anymore? You have to set it up from abroad and come with a work visa? This seems like a very big change, you would think I would have read it soemwhere else in some of these forums.

No. Not exactly what I'm saying. Searching for a job while on a tourist visa is, and technically always was, a violation of your landing permit agreement. If you had said you were looking for a job, as opposed to tourism, you would have been denied entry.

What I am saying is that now, MOFA will not send your COE to your company until you have established a plan to exit the country. Two years ago, you used to be able to get your COE, take it to immigration and get your tourist visa changed to a work visa. Not only can you no longer do this, but you technically can no longer wait inside Japan for your COE and then go to Korea or Taiwan to pick up your visa and come back, which is what I did, as I moved to Japan after the job offer, but before the paperwork was complete. If the Ministry of Foreign Affairs knows you're in Japan, they will not send the COE. They might not know, because immigration is Ministry of Justice, and the two don't always coordinate, so people slip through all the time. Still, it is not recommended you wait for your COE inside of Japan. It might not get to you.

You might want to save even more money to go take a trip to Taiwan or Korea and have your company send the COE to your hotel room. Then you go straight to the consulate, get the visa, and go back to Japan.

People do all sorts of illegal or against-policy decisions and they don't get caught. I did things I shouldn't have, and I did enough research to know the risk was manageable. However, with the restrictions that were added after my arrival, I am not so sure I would have done the same thing.

Okay, you still have me a bit baffled, which may be more a reflection of the crazy way things are done in bureaucracies like this than anything.
So let's say I came to Japan on a tourist visa and found a job while there. How could I possibly get myself a work visa at that point? Or could I?