You can instal the OS up to 10.3 (10.4 just bogs down anything G3) with an external cd drive..
not true! i have a G3 ibook and tiger runs better then panther...in fact it runs way better. (providing the ibook G3 you were given meets tigers min specs)
http://en.wikipedia.org/wiki/IBook
in order to reinstall osx the external drive would have to be firewire,as ibook wont boot from usb dvd drive..or could try target disk mode
http://support.apple.com/kb/HT1661
you could try getting new power adaptor on craigs for cheap
some speed tips once (if) you get tiger installed
-in dock use scale effects and no mag or animate...also turn wallpaper off and use colored
-turn off dashboard and turn off spotlight,if has bluetooth turn that also off
To turn Dashboard off: use terminal
defaults write com.apple.dashboard mcx-disabled -boolean YES
You have to restart the Dock after making either change for it to take effect:
killall Dock
To turn Spotlight off: use terminal
cd /etc
sudo nano hostconfig
SPOTLIGHT=-NO-
ctrl-x
y
enter
Then to get rid of the existing index, run these two commands
sudo mdutil -i off /
sudo mdutil -E /
reboot computer
try using camino as you browser......