I think Dad should decide if he wants an SLR (in which case you are buying into either the Canon or Nikon system) or a digital camera, such as the Coolpix. I don't see how you can compare these two cameras.
The Rebel XT is a digital SLR. Nikon's digital SLR is the D70 (about to be the D70s).The Coolpix 8800 isn't an SLR. Canon's closest alternative is probably a Canon PowerShot G6.
In the Overall Conclusion, in its review of the 8800, dpreview.com summarizes the difference between an digital SLR and a digital camera read the conclusion
I've used the Canon PowerShot G3 (which I recommended that my Mom purchase), and I have a Nikon D70. I already had a Nikon film SLR, so the decision to buy the Nikon vs. the Canon was already made for me. I think the G3 is a great camera, but the shutter lag drives me nuts. That said, I already owned a speedlight and 4 Nikon lenses, so I had a lot of the stuff you'd need to buy to make the SLR as versatile as the 8800 from the get go.
There is no comparrison between the two, and IMO the Canon is probably the best Digital SLR camera you can buy for $1000 (Nikon D70 lovers will argue ).