You don't have to give up 10.3 compatibility to build a universal binary. Set the PowerPC version's deployment target (add a build setting named MACOSX_DEPLOYMENT_TARGET_ppc) to 10.3. If you're writing a C++ program and you want it to run on OS versions prior to 10.3.9, you have to use gcc 3.3 to build the PowerPC version.
Xcode 3 allows you to build apps that will run on 10.3, 10.4, and 10.5. It includes SDKs for these three operating systems as well as the gcc 3.3 and gcc 4 compilers. You'll have to do an optional install to install gcc 3.3 as well as the 10.3 and 10.4 SDKs. If you need older SDKs and gcc compilers, you'll need to install Xcode 2.5.
The Mac OS X Deployment Target build setting determines the minimum version of Mac OS X your program will run on. This assumes you're not using any technologies introduced in later versions of Mac OS X. For example, Core Data code will not run on 10.3 because it was introduced in 10.4.