First, you need to be sure that there is a federally liscenced dealer (FFL) locally that will accept the out of state transfer for you. Usually, most will charge between $25-$50. Get this nailed down first. No point getting waist deep in a deal and not having anyplace for the person to ship to. [url]http://www.gunbroker.com/home.asp[/url] has a list of FFL dealers willing to do transfers.
The harder part is making absolutely sure that the seller is legit. I would have to say that of the online transactions I've seen so far, including the ones that go down on the Equipment Exchange here at AR15.Com 99% or better have been reliable. Lately there has been a few incidents that remind everyone the realities of sending a stranger from another state money or goods in return for the same and everyone gets a little more cautious.
There are ways of limiting your risk though.
Credit cards are a good insurance policy but usually only a reality when dealing with companies as apposed to individuals. Paypal is another option and it adds the benifit of being able to use a credit card to purchase from an individual. Lately there have been some complaints about where Paypal's loyalities lie, they tend to look out for themselves first. Finally, using Postal Money Orders give at least a minimal level of protection. Theory being that if the person stiffs you then it would involve mail fraud and maybe the Post Office could/would get involved.
When sending any payment or goods it is a good idea to get verification from the shippers (Post Office, UPS, FedEx) that the package has been delivered.
Doing deals over the internet does take some patience though. When you are expecting a package to arrive from someone and it doesn't arrive on time panic does start to set in, that's where good comunication between seller/buyer comes in.
Don't be afraid to ask for a phone number from a person your doing business with.