Low End Mac's Charles W. Moore tells his tale of replacing a dead iMac with something that can run OS X 10.4. He rightly says that for older Macs, 10.3.9 works better, but if you absolutely must run 10.4, here's what you can run it on:
-- He recommends G4 Powerbooks and iBooks ... naturally.
-- The Mac Mini ... if you can get a cheap one.
-- A 750 MHz G4 iMac (available for about $350, he says ... and if that's the "lampshade" variety, I don't think you can get them that low)
-- 867 MHz "Quicksilver" Powermac G4 tower (about $550 sans monitor, he says)
He also has some software suggestions, including the gimmies (Thunderbird) along with AbiWord, Tex-Edit Plus and TextWrangler. Click over for links.
Moore also offers that at a minimum, he uses 10.3, since he never liked 10.2 and continued to use the Classic OS (9.2.2) until 10.3 "Tiger" came out. I'm a big fan of 10.3.9 and haven't seen the need, as yet to upgrade to 10.4 for the iBook G4.