I came out of lurk mode and registered just for this topic! I have the 20in iMac G5 and have concerns about my hard drive temperature too.
My hard drive is the stock 250gb Maxtor, and having dowloaded Hardware Monitor I found it to be running at about 53 C, but the SMART temperature reading is about 74C. This has been discussed alot on the apple forums, and the consensus is this is hot!
However, when I discussed it with the the apple techs, they had no idea. I had downloaded the Maxtor specs, but they were unaware of such specs and not heard of Hardware monitor. My solution is to carefully back up to an external hard drive!
But, aswell as concerns that the drive is too hot for its own good, I was worried about the knock on effect of this heat. The display can get very hot for example, and surely this heat is spreading internally. But as I say, the apple techs I talked to didn't share my concerns.....
I used to be into PC's before macs see http://alexprice.freeservers.com
the hard drive I had in there used to measure 35 degrees celcius max. I'm not sure what the heat would do to the screen on the iMac G5, between the screen and the drive is like a foil material, so maybe that reflects the heat back???