I'm going to take a different path here. I don't think any portable of this vintage is going to be a good choice for kids whose primary use for it will be playing games.
That said, of the options thus far offered, I'd have to go with the iBook G3; I doubt the "stink" is still going to be a problem on most of them, which have surely by now been used enough/are old enough that the smelly adhesive has off-gassed sufficiently to no longer be noticeable. I have no experience with them, but if I was in the market for one I wouldn't let that (hopefully former) issue stop me. Furthermore:
- Cost: iBook G3's are easily the cheapest of the lot and thus cheaply replaceable in whole or in part. You could buy multiples of them for what you'd likely pay for a good-condition TiBook or especially, a Pismo.
- Durability: Logic boards may be an issue, but with computers this old it could be an issue with any of the models discussed. TiBooks have hinge problems, and if you give one to a child to carry around and use where they please, sooner or later they're going to break one or both, and then you're stuck using the thing as a desktop. Pismos probably won't break, but why would you give something that sought-after and pricey to a kid to play games? Lombards would be a better choice in that form/style factor. But, with Pismos and Lombards (and sometimes TiBooks) you run into the dreaded pink screen issue from dying LCD backlights.
So, there are inherent compromises involved no matter which way you go with any PPC portable. What I'd suggest instead is a Mac Mini G4.
They run OS 9 well, they're as portable as any typical game console like a PlayStation, GameCube, XBOX, etc.; and like those, it's simple enough to hook them up to a TV or other display. It'd be hard for the kiddos to break one, and if so they're usually easy enough to fix. If I was looking for a classic Mac gaming station, especially for kids, that's what I'd get hands down.
My $.02. Good luck with your search!