Yeah, max out the RAM (1GB is it) and put any disk-intensive stuff on an external drive.
For a "PC killer" I think you chose the wrong Mac. It's a starter machine (and I'm getting one as soon as certain funds become available), not a speed demon. Think of it as a lower-end Mac laptop in a funny case without a screen. The biggest issue is the hard drive, since it is indeed a laptop drive, and they tend to run slower (4200 RPM is the standard instead of 5400 or 7200 in desktops). An external firewire drive could certainly boost your performance.