Hi giles12,
Although I don't have much experience with PC builds and modding in general, I do have plenty of experience with Apple machines and taking them apart.
It's because of this that I think you're going to struggle to do anything meaningful with the clamshell case.
First off none of the apple components (with the exception of maybe the wireless card, if fitted) are going to be of any use to you.
Motherboard, RAM etc is all Power PC based so a hacked version of OSX will not install with these components. Even if it did the speed of the G3 would make it pretty much unusable.
The screen has a very low resolution by todays standards (12.1 inches with resolution of 800 x 600) and almost certainly uses a proprietary (ie. non-standard) connector for the video.
This basically leaves one option, remove all the internals and replace with modern components (which I suspect is what you intended all along.)
You'll never fit a micro ATX logic board in there thats for sure so the only option would be to gut a netbook, notebook or something similar. Even so I suspect you'll have numerous issues with space, cooling, EM shielding, location of ports, etc, etc. Thats all before you try and replace the screen too!
What about power/batteries? If you intended to run off a permanent power source (ie. always plugged into a power cord) then that would free up some space in the case where the battery was located. A small gain but I don't think it going to help all that much.
All in all, even if you did manage to cram everything in there I think it would be hell of lot of effort for very minimal gain. (Netbooks suck IMO). Personally I think its a no go in terms of 'bringing it back to life more powerful that ever'.
Maybe someone with more experience and knowledge of PC components could offer a better insight but I would maybe start thinking about an alternative use for the case.
Anyway, don't let any of that put you off, I'm sure there's
something you could do with the iBook even if it's not what you initially had in mind. Assuming you're happy to trash all those mac components) then I would start there, take everything apart and see how much space you've actually got to play with inside that case!
Good luck.