The spanning hack does exactly what you want and I don't know of any other way to drive an external display at a higher resolution than 1024x768.
I guess to make spanning use as little resources as possible, you could make the external display the primary display, at whatever resolution you want, and set the iBook's screen as the secondary, and then change the iBook's display to a resolution of 640x480 at 256 colours and set a solid colour desktop on it and put no windows on it. Align it on top of the external display, turn the brightness down, and that's the best you can do, I think.