You' could get a FireWire card for your G3 and transfer digitally from your DV camera to your Mac. This way your video footage never leaves the digital domain and there's no loss of quality.
FireWire cards can be had for under $100 I'd imagine...
Be prepared for the fact that DV footage requires a lot of hard disk space - about 1 gig for 5 minutes, so you may need a larger hard drive.
Also, I can't tell you how successful the FireWire card solution will be. I think some people have had problems, and maybe some FireWire cards are more equal than others...;-)
Also, your onboard G3 video may not be that great at displaying 25 fps video - I can't remember - so when you add up the cost of all these upgrades, you might want to consider trading up to a new iMac or G4, and selling your old machine....