It clearly isn't an oversight. When people hold their pad they predominately use it in portrait mode. When people use it with a keyboard, they want it in landscape mode. This is pretty universal.

And, guessing, I would imagine people use this sans keyboard >95% of the time. So they gear it for that. Or should they put two cameras on it?

I highly doubt Apple was oblivious to this, but there are always compromises.

As to quality, the quality of this camera is equivalent or better than the overwhelming majority of webcams. Maybe people are doing xxx streams or something, but for a corporate meeting this is about three tiers above the average.