That's how I use my G4 mac mini - 1.5GHz (PPC), 1GB RAM, 100GB HDD.
My setup. The mini with specs described above. To that, I have connected 2 2TB MyBook WD enclosures - 4TB. Each MyBook is raided (mirror), so the total space is 1TB on each enclosure, for a total of 2TB. I keep all my music files on one MyBook, which gives me 1TB mirrored, so if one drive goes bad, I don't lose all the music. The other mirrored MyBook, also 1TB, has music files I've downloaded through bittorrent, that I have not as yet had a chance to listen to - as I gradually do so, the music that makes it, gets transferred to my music MyBook... so far each MyBook is about 60% full. I keep the iTunes library on my mini, and it accesses the files on the music MyBook through firewire. The mini in turn is hooked up to the AUX in my stereo, and plays through the big speakers - with very good quality (I only use lossless codecs). I can access the mini from my iBook (wirelessly) through JollysFastVNC, and do whatever I want with iTunes etc. on the mini - all from the screen on my iBook.
I leave the mini and the MyBook drives running 24/7. The only slight downside is that the MyBook drives power down, and when I want to fire up iTunes, it takes about 10-15 seconds the first time before the MyBook drives kick in out of the sleep mode, but no problems with performance. I've had this set up since April of this year, and have not had any problems. Oh, and I'm still running OS X 10.4.11 on the mini, because it is super stable - I never had one crash - a super stable combination PPC G4 and Tiger. I'm also running the latest iTunes. Everything is rock solid, and performs very well as a music server.
The only other thing I use the mini for is bittorrent, which I have running most days and most hours.