Things work well! I bought my PowerBook explicitly to run linux on it. Nice big screen, small, light, decent battery life.
I ran Debian for a while and have recently switched to running Ubuntu. Things tend to "just work" with Ubuntu.
I hear there is a lot of progress being made with the PPC port of Fedora. It should be interesting to try one day. Have a look at FC4.
XFS is supported by the new Debian Installer (the Ubuntu installer is based on Debian's). I use XFS because it is fast, stable and efficient.
You will not get 3D accelleration (yet.... maybe one day). Write to ATI and tell them to publish specs! We want an open source driver! The binary only drivers that ATI have on their website will only work on x86.
The r300 project shows promise of having open source 3d drivers for the radeon.
Ubuntu will configure X without any problems automatically For Debian pure, who are still stuck with the old XFree86, you may want the XF86Config file.
With Ubuntu, I have VGA out (DVI out to be technical), provided I boot the machine with a monitor attached, with this xorg.conf.
With standard Debian, I managed to get VGA out using the following config file XF86Config-4.albook.vgaout. I had issues playing video (xine etc) on the LCD with this though.
The powermac sound driver needs some serious love, but it works okay. The Ubuntu setup works pretty much flawlessly.
With kernels around 2.6.8-12 (i forget what exactly) and debian, i found that the speaker volume is strange, but headphones are okay. Go figure.
BenH has patches against 2.6.9 to add sleep support. Close the lid and it works great! Check the debian-powerpc list for copies of the patch. This is in kernel.org kernels now with many bug fixes and works brilliantly.
Ubuntu will sleep and resume out of the box
You will need the binary only firmware. This is pretty easy to find. IIRC Ubuntu shipped with the right files, so everything just worked.
I have no idea. I haven't used a modem in years.
Firewire, USB, ethernet, pcmcia all work fine.
Airport Extreme will NOT work. Convince Broadcom to release some specs and we may see an open source driver. They have not been very co-operative so far.
The best bet is to use a PCMCIA card or USB dongle. A bunch of these work under linux. Make sure that you're not buying one that has binary only (including partially binary only) or ndiswrapper style drivers. I use a Prism54 based card and have had a lot of success with it. Although I hear that the manufacturer of mine (Netgear) has now changed the chipset without changing the model number. It is this kind of vendor stupidity that makes me never want to buy any of there stuff ever again.
However, my card did 'just work' under Ubuntu.
Works fine in the normal linux way.