I've never seen the display removed and made into its own display, I think the majority of the circuitry supporting the display is either inside the computer (inverter board) or integrated into the motherboard (a b*tch to remove). You can, however, remove the display and make the computer a small, thin, functional machine. I've actually done this one, we're currently using a tibook 550 (like yours) as a car-puter. External displays still mount properly, and all the usb/firewire ports still work, so that's a viable option. The only problem is finding the software hack to disable the internal LCD - on ours, the laptop still believes the display is attached, which creates some interesting "challenges" anytime we remove the display.
Of course, the other thing you can do is order new hinges and replace the cracked ones, if the system still works you can patch it together and either use it (the tiBooks rule) or sell it for a tidy profit.
The biggest tip I'll give you: Don't forget Firewire target disk mode. If you decide to remove the display, you can boot it as a firewire disk and use it as the boot disk for another system. We used that to set up the software and set up the screen as the default screen for the system.
It's definately a viable system though. The tiBooks aren't too difficult to work with, and I'm sure someone here knows where to find the Apple Service Manual for the tiBook, which will REALLY help in making the surgery clean. Keep me posted on what you wind up doing!
Edit: Parts
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