You'll probably need another piece of hardware, I'm afraid, since the iBook doesn't have an audio-in jack. An audio-USB interface like the iMic would do the trick. You can use SoundEdit to record the audio, and iTunes to rip the resulting WAV/AIFF file to mp3.
As far as quality, use the best tape deck you have, use the best audio cables you have (probably need an RCA>mini 8), set the playback volume high enough that the loudest moments just touch the red on SoundEdit's sound meter. Try several recordings with different settings, keep the best.