Have you gotten iLife '08 to work on your Mac with a 3G Processor at all? Because I tried to install iLife '08 on my Mac (I too have a 3G processor iBook) and it told me that iLife '08 will not work at all with a 3G processor
You can modify the distribution.dist script to remove the system check, but I highly doubt that it would run at all. I'm going to venture that much of the package's features require at LEAST Altivec.
BUT... I've got a spare G3 iMac around. I think I'll give it a try anyway...