I used Carbon Copy Cloner to copy everything over, then upgraded 10.2.6 to 10.2.7 using the supplied DVD.
There were a couple of glitches: the system preference pane cache had to be deleted - system was still showing keyboard and mouse as separate panes, while they're now one, and I had to re-install StuffIt Deluxe.
Other than the occasional application that had to be re-registered, it seems to be working so far.
One tip: if you use the iTunes Music Store, remember to deauthorize your old PowerBook, as the authorization is hardware-based.