REFURB! REFURB! REFURB!... There, I got it off my chest.
Come to think of it, 1100 units isn't too many in light of the 200,000+ units Apple pushed last quarter, but it will probably fill up Refurb stocks for quite some time. And if they DO slap on a "certification" of some sort on the G5 casing (perhaps laser engraving ala iPods), they'd make someone happy. "This unit was part of the legendary Big Mac that made the Top 3 SuperComputers."
If they do a straight 1-to-1 swapping of PowerMac G5s to Xserves, there'd be quite a LOT of vacant (physical) space in their cluster. The dimensions of each PowerMac G5 is, based on specs, 20.1"x8.1"x18.7x" (51.1cm x 20.6cm x 47.5 cm), and each Xserve is about 1.73"x17.6"x28" (4.4 cm x 44.7 cm x 71.1 cm). Now, basing on just the pictures available on the net (since I can't find the dimensions of the racks they used), the Xserves are slightly deeper by about 10" (28" vs. 18.7"), so there'll be about something almost as long as a ruler protudring from the back of the racks. But, using the existing rack setup, they'd be able to stack at most a dozen Xserve in each of the 3-node pack. Assuming each rack contains 4x3 rows, that would be 48 Xserves in each rack compared to the 12 PowerMac G5s in reach rack! That's 4x more power in one rack!
And furthering these assumptions, at 1100 PowerMac G5 units, they'd be using about ~92 racks (1100 units / 12 units/rack rounded up). Using Xserves, they'd be using only ~43 of the 92 racks they have. Perhaps they'd be jumping to a 2200-node cluster soon?
Of course, these are all "max" assumptions. They may as well put in PCs there or relocate the racks elsewhere (though that'd mean more vacant space in their cluster), or most likely spread out the Xserves for easier maintenance.
Since they'll be moving to Xserves, each of those G5s are _fully loaded_. I doubt that they'll be keeping all of the parts used, except perhaps for the Mellanox interconnects. Each node has 4GB of RAM (4x1GB) and 160GB of SATA Storage. Selling a PowerMac G5 with that even at refurb is overkill for most, so they might be breaking them down into smaller, more manageable chunks.
Of course, another likely scenario is to sell these cheaper to another institution that wants to build a supercomputing facility. At least they've been guaranteed to work.