[CentOS] About ISP sniffing, trying to undertstand

Hello,
I am trying to understand how Tor protect to ISP sniffing in proxy.

I suppose this steps:

1) Dowload Tor software, software should signed or downloaded from SSL
site.
2) Computer software verify that software is not modified, and install
it.
3) Vidalia starts tunnel, At this point how keys are exchanged? 
...


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