Stick Leopard on it , my G4/667 TiBook runs 10.5 beautifully. All it takes is a little Open Firmware hackery (which has virtually no chance of harming the machine I might add) and you're good to go. The G4 iBooks use Radeon graphics chips too so you won't have much in the way of graphics issues. The more I look at the specs, actually the more I think it'd be a great laptop for running Leopard on. Radeon 9200, 32MB VRAM, DDR SDRAM, 30GB of hard drive space. I'd do it.

I have a G4/800 iMac and a G4/667 TiBook both running Leopard and it's great to use. Turn off the silly menu bar, hack the dock to the low-fi version and you're set.