It's entirely possible, and there are so many different paths to the same goal.  I think it depends on your budget and how much work you want to put into it.  Here are a few scenarios to think about:

1.  You can just buy a Powermac G4 from ebay, even one with an older processor, then spend more buy purchasing a CPU upgrade on ebay, and ebay store or elsewhere.  You can also purchase upgrade parts from ebay as well.  After installing all those upgrades, now you can purchase another Mac and put those parts from the old Mac into the 2nd purchased one.

2.  Purchase a Mac from ebay that has a broken or missing part (power supply, processor), then purchase the broken or missing part separately from another auction.  Some sellers may want to sell the whole machine at a cheap price because they don't know how to troubleshoot it or don't want to take the time to have it fixed professionally.  This works out for you, the educated mac technician, since you would possibly know if it's a simple fix that wouldn't require purchasing any parts or maybe just replacing a cheap part (Bad RAM stick).

This is a sticky situation though, because you have to determine which mac requires the cheapest parts replaced.  You can check out an iMac that has everything working except a broken speaker, and another one that has everything working except the monitor itself.  Without seeing the two in person or asking questions, my guess is that the one with the non-working monitor would cost more to get fixed.

3.  You could start from scratch and purchase a bare case with just the power supply, then add on from there.  The downside is that you'd have to research the parts beforehand to ensure that they would work with the case and/or other peripherals that you'd be purchasing.  On the plus though, whatever parts that wouldn't work can be saved for yet another project or sold back onto ebay.  Personlly I like to save them as a backup in case the other part fails, but if I see a good track record with the part then i'll save em for other projects.  It's true that this might cost more in the long run, but if you've got someone locally that's going to give you a broken PMac or if you can talk someone into giving you theirs, I say go for it.

While we'e on the subject of this, maybe someone can tell me/us the pros and cons of buying Mac laptop parts from ebay.  F'rinstance, what's the least amount of parts a broken laptop should have in working condition, whereas the replacement parts would be cheap to replace?
"Tuesday's in the 80's?  I was in bed by 8... ...and home by 11.  OH!" -Quagmire