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Can I install Leopard on this machine? Will it run better? I didn't think it was a good idea to upload the new software on this old machine....

Run Leopard. I loaded it on my 867 G4 with no problem. Make sure you max your ram. OWC is great for the ram.
 
So....a couple more questions....

What kind of RAM is compatible with my Mac? Can I buy it anywhere or do I have to order it online?

And if I update to Leopard do I need to reload all my Adobe programs or will they stay in my applications?
 
Is there a certain brand 2gb ram I should use? Is there some I should be wary of?

I wouldnt upgrade that machine at all.

I would see if I liked the Mac experience and if so, buy something less dated.

Yea, a new iMac would be great - But I wouldnt have bought THAT model...

Maybe a newer intel core duo 2, around $500 - those are 20" and pretty fast...
 
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