That allegation about "blowing power supplies" sounds pretty bogus. I suppose it's *possible* that some B&W motherboards might of had weak onboard power regulators on the motherboard itself (unlike the Beige the VRM wasn't a swappable module) but... still seems iffy.
It's been a long time since I installed the G4 in my unit, and the only problem I recall having was actually getting the firmware patch to take. (Apparently I didn't hold the programmer switch long enough the first time, or something.) I didn't touch the multiplier jumper blocks, though. There's a thread on the Apple support site:
http://discussions.apple.com/thread.jspa?threadID=2023823&tstart=135
Linking to a Knowledge base article:
http://docs.info.apple.com/article.html?artnum=95157
That suggests that bad/incorrect jumpers can cause your symptoms... did you try rejumpering the system as you had it for the 500Mhz module, or just put the G3 back in with the 400Mhz in place? If you haven't touched that since the swap I suppose it's remotely possible the jumper block could of failed by having one of the little metal bits fall out or something. Seems sort of a far-fetched but that's about all I can think of.
(It's situations like this that make me laugh at an old argument actually made by some olde-tyme-y Mac users back in the day claiming that Macs were "more friendly" than PCs because with Macs you don't see "scary" diagnostic BIOS messages on the screen before the OS boots. Oh, heavens no, let's not have the machine always come up in a least-common-denominator console mode and be able to actually tell you in words what might be wrong with it if something goes wrong. That's "hard". A black screen is so much better.) ;^b