The signal processing application gets a big boost from Altivec, and the XServe is 'naturally' G4 hardware (with many units in production/warehoused), whereas Eyetech and Genesi aren't cranking out *mass* quantities just yet. Plus, the XServes have the dual option available, which I assume they're going with here... Mai-based dual solutions are still in their infancy.
...on top of that, Terrasoft (Yellow Dog) have a decent history supporting gov't projects (NASA, etc), and seem to be the organizing factor here. (As in they, rather than Apple, probably put the bid in to create the 'solution.')
Maybe some G4-XEs could've fit the bill... 'Blades' or 'Micro Servers' (Mai's server-on-PCI-card offering?) would doubtless provide a better density, if they were available with G4s/Altivec'd chips... But it looks like they were looking for a level of implementation support here (server management), that Terrasoft felt they could claim and make good on as maintainers of YellowDog, while Eyetech or Genesi might be more hesitant, given that right now, we're still feeling sort of lucky to have Debian/etc. booting at all.
Now, if SuSE polishes up their PowerPC distribution and lands some defense contract, maybe they'd recommend some hardware from our camp. But by then, IBM should have their own line of 970 machines launched, so we'd be a bit niche-limited.