Your PC may burn DVDs already, but can't use Apple's iDVD program, which from what I've read is much more usable than the PC equivalents. If you're not going to use the Mac for its unique strengths (i.e. iLife, etc) you might as well buy another PC for basics like Photoshop, Word, and WiFi. There's more to the Mac than just its looks!
As to DIVX, I don't know if Apple's DVD player will play that format. You might have to download VideoLAN Client for VCD and DIVX playback.
The only caveats to the 12" PowerBook that I know of is that it's basically the iBook's guts with a faster processor and aluminum enclosure. That means less screen resolution than the larger PowerBooks, and no PC card slot. I think it might not have audio-in, either.
You really kind of might as well get the iBook, now that they're G4 too. The iBook will get better wireless reception and its polycarbonate enclosure stands up to abuse better than the PowerBook's aluminum.
Your friend's price IS a great deal though, and you'd have money left over to jack up the RAM a bit ([url="http://www.crucial.com/]Crucial[/url] is a good place to get good memory (cheaper places can sometimes sell you crappy memory, to which OS X is very unfriendly). Maybe you could ask him what an iBook would cost you....
OK, so I'm not being convincing. Sue me.
