I'm not sure what format they're in. More than likely it won't be anything a G3 can handle. Most streaming video these days is going to need at least a dual 1GHz G4 to pull it off. About the only iMac G3 that I would assume could get close to doing it would be a 600 or 700MHz model with the full 1GB of RAM installed.
The only difference is the G4 vs the G3 chip. The velocity engine really helps with things like video playback. It's hard to say if that would make or break it though.My iBook G4 800MHz 1.12GB RAM, still running Panther 10.3.9() & iTunes 7.7.1 has no issues whatsoever playing iTunes movies. I have my movies on my 2012 Mac mini & i use the "shared" option from it to watch them (and my whole music library is available as well) on the iBook.
In fact, watched Home Alone on it last night in bed!
If anything it has to do with the g3 using a PCI amd rage pro and the g4 using agp GeForce 2/4 mx.
The latest version of iTunes that will run on a G3 is 9.1. I don't think any G3 has enough power to be able to playback iTunes Store videos without massive skipping and stuttering.
Maybe you can't install a version higher then 9.1 but....
I had a tiger "superduper" image made from a ibook G4 that had itunes 9.2.1 (5)...i bought my ibook G3 800 and restored that image to it and itunes 9.2.1 runs just fine.
ps: I know Ive tried running mp4 downloaded utube videos using mactubes in both qt and vlc and nothing but lag.....
The last official version that will install is the last version of iTunes 8. I think it's 8.2.x. With 9.1, you have to install it on a G4 and move it over or use Pacifist. I've tried getting 9.2 and 9.2.1 working on a G3, but it has never launched. Always getting killed with an error in the syslog complaining about lack of CPU architecture support.