For encoding, harddrive speeds matter a little, but not noticibly. One of the biggest reasons that HD speed in a PowerBook may affect the performance is that OSX uses a lot of RAM and automatically uses the HD for virtual memory. The more memory intensive the application and the more applications that are open, the slower the performance b/c the computer keeps having to use the slow HD for RAM (sort of). Virtual memory (VM) isn't actually using the HD as RAM, but rather, it saves stuff from the RAM to the HD to free up space in the RAM, and then has to reload the info from the HD as soon as it is needed. The OS automatically uses a little VM, but not a noticable amount b/c most of it has to be loaded into the RAM. When RAM space starts getting low, the OS starts taking stuff that hasn't been used recently from applications and puts it into the VM. I just had to clarify that VM doesn't actually use the HD as RAM so I avoid corrections from others.
Although the tower mentioned doesn't actually have L3 cache, L3 cache does make a big performance boost in programs that use repetitive code b/c the L3 cache operates at 1/2 processor speed whereas DDR memory only operates at twice the bus speed (which is 133Mhz). It made even a bigger difference before DDR memory considering you would have a (or two) 800Mhz G4, 256k L2 cache running at 800Mhz, 1 MB DDR RAM (L3 cache) running at 400Mhz, and a whole bunch of PC133 RAM.
I am just watching for how Intel's application of DDRII is going to work out. RAM running at 4x the system bus speed (133x4=533Mhz effective speed) might be nice. Then again, we all know how it is rarely used at its maximum effective speed. I just want to see the actual bus leave the 133Mhz speed! Let's get a 266Mhz bus or something and some HDs and such that utilize it. I know that they will have to work backward compatibility into it and upgrade the ATA technology, but they have been using the same stuff for years! It is time that we stopped focusing only on the processor speed and actually get the rest of the computer caught-up for well-rounded performance!