Was there ever any internal designation within Apple? Or is this just something that a bunch of people on the internet thought up because it made sense?
"G3" was Apple's own designation. After the 601, 603, and 604, Apple's marketing gurus wanted something to really differentiate the PowerPC 750. They advertised it as the "G3" for "Generation 3," the logic being that the 601 was "Generation 1" and the 603 and 604 were "Generation 2."