It can but with a caveat. Whilst "USB Mass Storage" is a standard that most if not all USB drives adhere to, the AGP G4's firmware supports only certain chipsets for USB booting. It's VERY 'hit-and-miss' and generally a failure.
Also, booting from the built-in USB ports is exremely slow, since it's only USB1.1.
Better off to try to get a PATA/IDE optical drive or a firewire enclosure.