USB headset-can't hear mic input even tho I see it!

OS 10.3.9
G5

I may be doin' something simple wrong. . .

I need to use Skype for an interview Monday, and I bought a USB headset. I assigned Sound Output and Input to be the headset and I can hear the sound through the headset speakers just fine, but cannot hear the mic audio, even though in the Sound Preferences panel I can see the Input level meter reacting normally to the mic audio as I speak.
(which indicates that the headset is working properly, at least.)
Any ideas about what I'm not doing right will be appreciated!!

I *think* Skype has a set up wizard that lets you test this... records your speech and plays it back to you ten seconds later. Is this what is not working?

If you just can't hear your speech in your ear as you watch the system preferences panel, this may be perfectly OK - the headphones you bought may not provide what is called "side tone", which is some limited playback of what comes in through the mic into the ear piece.

Thanks for the response. I tried the Skype test thing right away, but unfortunately that did not work.
The trouble is somewhere in the Mac system. I can't get the audio from the headset mic to be audible anywhere at all, even though I can see the level meter responding in the Sound Preferences panel. That's what is so confusing or frustrating. It should be audible. . .

Any other ideas very welcome. Thanks again.