I experienced the same problem, therefore I wrote an email to Marcel Bresink, the developer of "Hardware Monitor". In his first reply, he said that the temperature sensor of the GPU does not always respond correctly.
But some weeks later I got another email from him. He said that he was able to examine the problem in a little bit more detail, since the Mac OS X 10.4.5 update offered some new capabilities that allowed him to have a closer look at this problem. In the end he found out that this sensor is not measuring the temperature but the load that is on the GPU. He also mentioned, that version 3.3 of Hardware Monitor (version 1.4 of the widget) should resolve this problem.
By the way: did you ever hear the GPU fan in your PowerBook? If mine gets hot, I just can hear the CPU fan spinning (the left one) but never the right one... I'm having a PowerBook G4 1,67GHz with the 1440x960 display, too.
Kind regards, Lars
EDIT: I just installed version 3.7 of Hardware Monitor. It doesn't even show the GPU sensor anymore...