The SDK *says* it requires an Intel Mac, but my wife found instructions on the net and just last night we compiled and ran from XCode on her G4 to her iPhone.
She had been excited that we had an excuse to upgrade from her G4, but it turns out iPhone development doesn't require us to upgrade.

Nope. Still read-only, and zero sftp support.

Fugu is a good, free SFTP program for OS X. It would be nice to have this integrated into Finder, though.

We were actually using NT as our firewall for the office at the time (dialing up and sharing the modem with WinGate) so it was not a problem for them to see a Windows computer when they came for the install. After much trouble with WinGate, I convinced them to let me try Linux on the firewall and we are never going back.
There was some trouble when for a while we were switching frequently between Linux, NT, and 95, but I think that was related to BellSouth's DHCP server being down frequently. Now if they would just offer us a static IP...