That will work fine. You'll have a much better OS X experience.
Might want to scrape up a little more RAM but that's a decent start. One thing you definitely want to do first before you start installing stuff on it is to install an extra internal drive and clone the system to it using SuperDuper or something in case something breaks, since you don't have any install discs for it. SD does a 1:1 bootable copy of the HD to another HD.
I know I'm pushing it now, but, down the road, the processor can upgraded for around $100 to a faster processor and run Leopard, 10.5.8.
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