From the Pismo technote...Just be aware that the machine is not designed to run with the lid closed
and from lowendmac....The computer includes 8 MB of video memory, which is enough to provide pixel depths up to 24 bits per pixel on all supported monitors when the flat panel display is inactive (display closed). When an external video monitor and the flat panel display are operating at the same time, half the video memory is available for each. In that case, the maximum pixel depth available on the external monitor at the 1280-by-960 and 1280-by-1024 picture sizes is only 16bpp.
Lid Closed Mode: Pismo supports "lid closed" (or clamshell) mode, which leaves the built-in display off and dedicates all video RAM to an external display. To used lid closed mode, your 'Book must be plugged into the AC adapter and connected to an external display and a USB mouse and keyboard (you might also want to consider external speakers).