I have a similar setup to yours: Quicksilver 2002 dual 1GHz, 20" Cinema Display, OS X 10.2.6, 1.5GB RAM. I upgraded the 64MB GeForce4MX it came with to a retail Radeon 9000 a few months ago, primarily to feed my Return To Castle Wolftenstein-Multiplayer addiction.
Do I think it was a wise upgrade? eeh. Maybe. RTCW is a horribly CPU-bound game, so it may not have been the best upgrade for my particular uses (I have only measured roughly a 5% frame rate increase overall using standard test maps and demos). However, the R9000 is a
great mid-range card for most uses and for games that aren't CPU-bound, it should provide a nice improvement over the 4MX. The 8500 is marginally faster than the 9000, but, then you have the added expense of buying a DVI -> ADC adapter, so, there's no real reason to consider the 8500 over the 9000, unless you really want the S-VIdeo out port that the 8500 has.
Hope this helps,
-A.