10.5 is as high as you can go on PPC. There's a minimum clockspeed threshold, but I don't remember what it is.
On your video problem, maybe the machine shipped with 10.3.x and you're using a retail 10.3.0 CD set? So there might be some driver issues. See if you can find the last 10.3.x "Combo" update on Apple's site, which should have heaps of drivers in it. EDIT: Ah,
here it is.
Not sure when they introduced the feature, but OSX can be installed over a network - maybe that will help for getting 10.4 onto the machine?