They couldn't really remove G3 code, since the only difference between a G3 and a G4 (code-wise) is the addition of AltiVec. So at worst, they turned off AltiVec-skipping routines.

But yes, Leopard absolutely requires AltiVec (or SSE on Intel.) Which means G4 or G5 only on the PPC side. From what I have read, a Pismo upgraded to a G4 will run Leopard, but if you slap the stock G3 back in, it fails to boot. (This is unlike the OpenFirmware trick, which is only tricking the installer, not the actual runtime OS.)