Suggestion: there's a slightly better way to phrase it:
-- An iMac is the Mac operating system running on Power PC hardware.
-- A G4 is the Mac OS running on somewhat faster Power PC hardware.
-- You can definitely run linux on such hardware.
On the third hand, Mac OS X consists of the Mac user interface (and
applications) running on a full-blown Unix kernel -- and you can easily get
to the Unix layer to run stuff. I haven't done the experiment, but I
predict that >90% of useful stuff that runs on linux would also run on Mac
OS X. So that may be a better way to go for people who are using Macs
now. Maximum flexibility, minimum disruption.
One more hint: I'm told that OS X runs quite a bit better if it has lots
of memory. And memory prices have been dropping like crazy lately. So you
might want to upgrade to 512 meg or so before installing OS X. OTOH if the
thought police won't let you upgrade, then you might indeed be better off
with linux, which does OK with amazingly small amounts of memory.