I got an xserve g4 1.33 last year, it came with the combo drive thats only for cd's. I had to transplant a superdrive from an imac into it to be able to install leopard on it.
My g4 dual 1.33 isnt very loud, it has variable speed fans, and mine is in 'workstation mode' using the optional apple AGP riser with an 9600 pc/mac edition 256mb. Apple offered the 1.0 and 1.33 xserves as servers, or as workstations. If you BTO it as a workstation, it came with the AGP riser, an ATI 8500 agp video card, and a sound card.
I'm not sure on the 1ghz version, I dont have one, but I think they have set speed fans (100%) so are really loud.
Other changes the 1.33 has that I'm not sure are on the 1ghz, are 64bit 64mhz pci slots. These are the only g4 macs to have that. Also they have 4 separate ATA133 IDE channels for drives, again the only g4 macs to have full speed ata133 controllers. You can raid the drives any way you want and get full speed with no conflicts.
So compared to a MDD, the xserve g4 has the fastest pci slots, the fastest ata controllers, no ata sharing (2 drives on one cable), and a normal 4x agp slot, no adc or funny pins. Whats missing is a sound system, and of course they never went over 1.33ghz.
I have been curious if a 1.42 cpu module from a MDD would work properly, but I'm kinda worried it would overheat.
Leopard runs great on my xserve, and I have never had problems with it.