You must have a rev. 1 B&W G3. I had a similar issue. The problem is that it will not take faster drives or large ones without a pci hd controller of some sort. Your usb 2.0 drive kit is a good idea, except if you are using it with the stock usb ports. It will be terribly slow. I saw a mac pci usb 2.0 card on eBay for 9 bucks, if you need one.
-maestro