I bought an NEC ND-2500A DVD-+R/W burner for about $60. Works quite well on my iBook (800 MHz G4, OS 10.3.5)
All I had to do is use Patchburn II, which loaded all the drivers and now I can use all the iLife programs.
iDVD doesn't work out of the box with external DVD burners, but there is a very simple procedure to enable it (google search for it...forget the name of the webpage). Basically you add two small files into your Home directory, and then you have the option to burn to an external drive or make an image in iDVD. I applied that patch as well, and I have successfully used iDVD as well.
Apparently, there is also a patch for the NEC ND-2500A to make it support burning Dual-Layer DVDs and makes it region free (although you need a PC to apply the firmware patch). I havent tried that firmware patch, since I dont have any DL media.