I currently use a G4 Xserve as home server with 10.5 Server. A little overkill for your setup but I can help get you started.
-Stick with one system. It can get confusing with multiple systems when your trying to find out where you have a specific file. Go with the FW800 MDD(same generation as my Xserve), I'll explain below.
-Like you quessed, there is a limit in how many drives you can fit into each system. The motherboards will only support 2 hard drives(3 if you willing to swap out your optical drive). Also the 733's motherboard most likely only supports drives 120GB and smaller. They only upgraded the motherboards in the later systems of that generation. The MDD doesn't have this issue. You can support more/larger drives than 2 with a PCI ATA/SATA card. Most G4 Powermac's can hold 4 drives but you have to make sure your not overloading the powersupply.
-Another option with the MDD model is to hook up external firewire 800 drives and just use the internal drives to run the OS off of. They would be plenty fast enough for storage and you wouldn't have to worry about upgrading the tower too much. Also you could hookup something like
Drobo via the firewire if you want redundant backup. You can also use firewire 400 drives and usb 2.0 drives if you install a usb 2.0 PCI card in either of the systems. You have several options. You just need to figure out which works best for you.
-I would recomend using 10.5 leopard on your system. The MDD should run it fine without any issues. The 733 technically isn't supported but you can get it on there via some work arounds(I've had 10.5 running on 466MHz G4's). Depending on what type of video card you have in the systems, you may not get all of leopards graphical features. Though you don't need them since the system will be headless. The network features are much improved in 10.5 and it works really nice on a home server.
-Running 10.5 is easy since screen sharing is easier to setup than 10.4. All you need to do is turning the feature on in the G4 via the previous post's instructions. Then the G4 should appear under network systems on the left side of your finder window on your other Mac's. All you need to do is select it then click screen sharing. Enter the G4's admin name and password, and your good to go. You can also do screen sharing with 10.4, but you will need aditional software to get it up and running. 10.5 is much more user freindly out of the box.
-File sharing is also setup via the sharing icon in the System Prefernaces. You first turn the service on then add which ever folders you want to share over the network and who you want to have access. For example if you only give the G4's admin access, you will have to enter the admin's user name and password if you want to access those folders. If you give 'Everyone' read access, anyone can view the files but can't edit them. Under options you can pick what sharing protocol you want ot use. AFP will only work with Apple systems while also selecting SMB will allow windows computers to see the folders and files. 10.4 file sharing works in the same way but the setup is a little different. You should be able to figure it out. After it's setup you would just select the system in Finder and you should then see the folders and files that you setup to be available.
-Best advice is to find out where you want to set it up. Out of the way so it can't be accidentally turned off. Install your drives and such, then hookup a monitor and keyboard/mouse. Get the OS installed and the settings how you want. Then unplug the monitor and keyboard/mouse. You should be good to go.
Good luck