There's nothing actually wrong with the hinge, it's perfectly fine BUT it's a bit small or something and the screen cables get pinched in it.
I'm not sure quite how it works, haven't got the iBook yet.
When I get it I will compare the hinges, old and new to see what the difference is.
I got a hinge and screen cable package for £27 including p&p, a bit expensive but it seems like a good deal provided the new modified hinge won't cause any more problems and the screen cables stay in tact.
Provided you're in the U.S Smalldog electronics sells them for $20 and i'd try and get a new style hinge if possible although I don't know how to tell the difference unless doing it side by side.
I'll tell you how it goes once I get the iBook and i'll give some information on how hard it all was.
Good luck,
Sean