All I have is one year of chemistry, but my understanding is that catalysts assist chemical reactions, without being involved in the reaction. They are vital substances, as they make oil refining and zero emission vehicles possible. They also make a lot of chemical synthesis possible.
So do we know how they work?
Also, I read years ago, that the very expensive rhodium and platinum (used in catalytic converters) could be replaced with a cheap iron-based catalyst-has this ever worked out?
The mechanisms are generally known, yes, but will vary depending on the reaction and the catalyst.
In the case of solid metal catalysts, the basic mechanism is:
Substrate molecule (let’s represent it by AB) has a pretty strong bond between A and B, which must be broken during its desired reaction with Reagent R.
Either A, B or both can form a bond (generally a complexation) with the metal; this weakens the bond between A and B, thus lowering the activation energy / making the reaction easier and faster.
So,
AB + Cat -> ABCat
ABCat + R -> AR + B’ + Cat
There are other cases which are more along the lines of:
AB + Cat -> ACat + B’
ACat + R -> AR + Cat
but whether through complexation or via more-“complete” reactions, that’s very basically it.
As for “using iron instead of the expensive stuff”, different catalysts are good under different conditions and for different reactions. The best hydrogenation catalyst in the world will be useless when what you need is a substitution reaction.
Without being consumed in the reaction, which is an extremely important distinction. And yes, we do understand (essentially) how these reactions work, and chemistry class should have taught at least a few of those mechanisms.
To use proper SDMB terminology the question should have been
"Fucking catalysts, how do they work?"
The mechanism of hydrogen catalysis on the surface of platinum metals is well known. Wiley | Global Leader in Publishing, Education and Research Not the be rude with you, ralph124c:, but this is another example of a time you could have Googled first. The concepts of surface chemistry are complicated, to be sure, but its kinda silly to doubt that they are well understood.
Typically, the catalyst IS involved in the reaction(s). The usual way is that there is an initial reaction in which the catalyst forms part of a compound, then a secondary (or even more) reaction(s) which forms the desired compound and the catalyst is a bi-product of the final reaction, allowing the process to repeat, thus only a small amount of catalyst is needed, as it is continually re-used, and some control of the reaction rate may be obtained by changing the amount of catalyst used.
I am not a chemist, and I know that much, so I am very sure that actual chemists know very well how they work.
2-3 oral doses of C[sub]2[/sub]H[sub]5[/sub]OH under controled ambient lighting conditions.
Enzymes as biological catalysts work very much the same way. They have reactive atoms positions juuuuust right so as to stabilize transition states between the reactants and the products. Usually there’s a transient bond between the reactants and some part of the enzyme.
There is more than one definition of a catalyst, some people like ‘Appears at a higher order in the rate equation than its stoichiometry would suggest’ but it’s not so snappy. We have an extensive knowledge of how catalysts work. Many years of empirical application of catalysts predated precise understanding, but we have good, if incomplete, ideas now.
There have been some interesting developments in the area with regard to ‘cheaper substitutes’. For example, reactions that were once considered solely catalysed by palladium have been shown to be copper catalysed, but then subsequently shown to be catalysed by the ppm levels of palladium in the copper species. Similarly, reactions which once required palladium catalysis magically proceeded without any added catalysts, only for further analysis to show that there was 50 ppb palladium in the sodium carbonate base used in the reaction. So historic and contemporary results needed to be taken with a pinch of salt. Proving there’s no metal in your glassware is costly and time consuming!
Well, they may not be consumed, but they can be poisoned.
I don’t think I got much of actual mechanics of metal catalysis until an organometallics class in grad school. I understand your point of catalytic cycles.
No, in this instance the “catalyst” is consumed. 
Sacrificial catalyst 