Minis have been put in Cubes, but it's a horrific hackjob as you need to screw with the plastic and backplates to align the ports. That's fine if you're doing it in a beige tower, awful if you're doing it in an acrylic white plastic work of art like the cube. I don't think acrylic is the right word, but it's the first one that came to mind and I'm going to use it.
Anyway, I think he meant put an Intel MoBo in your G5 and then put all the G5 stuff in the Intel MoBo, which of course won't work. If he didn't mean that, I don't know why you'd place a whole Mac Pro in a G5 case instead of buying a new Mac Pro. It wouldn't be cheaper to do, it's a dumb idea, and it would be seriously difficult.
Stick with your G5, unless you actually need an upgrade. There's nothing wrong with it, and to be honest, unless you need OS 10.6 (hard to need something that's not out yet), I don't get why you'd need it.
As for Psystar... or whatever the name is.... it's just as genuine a Mac as a Mac Pro is. What the hell is the difference? You have an Intel processor with an Intel chipset and a PC motherboard. That's not a Mac, that's a PC. You get the same thing either way, more or less, just varied architectures (well, x86-64, same architecture, but different motherboards and specs)