Admittedly I didn't really read most of what you were waffling on about, I do apologise.
I wouldn't rule it out, mostly because I've had very similar issues described in this thread occur with an iBook a few years back. Turned out the HDD was ****ed.
Edit: (sorry missed the last post there Nova77)
Even if you do find a faulty extensions, chances are turning it off won't fix the underlying issue. After all something's caused it to become faulty in the first place, right? I really do think you should just at least try swapping the HDD and trying a clean install. If I'm wrong then well slap my arse and call me Suzi and I'll shut the hell up.
Edit edit: I dunno what 1.67 G4 you have but
here's some info on HDD removal for the hi res 15" - ifixit's got the tuts for the other models too, not that they're a whole lot different.
Aside from all this if you're not confident or capable of doing this procedure then chances are what's causing your problem isn't anything you can fix yourself either, and finding out the problem from this forum ain't really going to solve
that issue so you might as well just take it to a repair shop and get them to fix it.