First off, this idea has been done before - someone did it back in 2004, and it was featured in not only the magazine Maximum PC, but in a book by that publishing company that came out later (that I have and remembered it from.) Unfortunately, if Barney Lascolais on the internet, he has kept himself pretty hidden; however, the PDF to the magazine is online in case you want to see the Mod: http://dl.maximumpc.com/Archives/MPC0304-web.pdf.
Second, I love this type of idea - I hate when modders just solely do a look/speed-boost mod that is very typical of both Macs and PCs. If you're going to mod, why not tailor it to your needs and/or add functionality that you can use and can't currently get? A desk computer, be it PC or Mac, provides a lot of practical use and saves a lot of space, so it makes perfect sense to me.
Third, go with what you need and what you know you will use it for - but at least get an Intel-based machine. Yes, it'd be cheaper to go with an old G3/G4/G5, and for what you may need it may be perfect, but as software continually gets updated and and grows, your machine can only grow so far. Even though there's no guarantee that going completely new will make you safe from upgrades, you're guaranteed at this point, with developers abandoning Tiger and the PPC platform, to be safer.
Fourth, as a suggestion, make everything easy to upgrade. The bad thing about a mod like this is that, because it is furniture, you're going to expect to keep this around for a while - possible longer than the computer guts you're putting inside of it. Making it easy to upgrade and prepare for future changes now will make work when the hard drive dies or there's a new machine to replace the insides with a whole lot easier. Even if you have absolutely no plans or desire to upgrade this machine once you are done, having this covered will save you a lot of time.
Finally, build this to what you want and think you will need. A hidden screen is cool, but is it something you either want or need? A vented desk drawer(s) or built-in USB and Firewire is cool, but once they're added, do you plan to use them? Think about all of the things you find inconvenient now with computing the way you do that making this mod can fix, and implement those - you'll find the list of features, and the things you most want and need, easily available to you.
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