yea, low density chips, like you said double banked. the same limitation as the Beige G3 and B&W G3 and Yikes G4 (i think cause its really a B&W under the hood)
they would only see 128mb out of 256mb available of the chips if you used a stick with only 1 bank = 8 chips ( high density chips) , and would see the full 256mb if it used double banked = 16 chips ( low density chips). i am not sure how many chips are on the sodimm stick.