This bug has been reported on the Debian BTS by at least four people. It occurs with Xserver 1.1 and 1.3 (but not with earlier XFree86). Manuel Tobias Schiller found out the problem.
Xserver fails to start on Powermac G3 machines because it tries to acquire I/O resources of another devices (a network board). Xorg works alone. The network works alone. However, when both are enabled, both fail. More the details (including the log, config, and links to other related bugs) are in the Debian BTS at the url above. To summarize the problem:
lspci -v says:
> 00:0d.0 Ethernet controller: 3Com Corporation 3c905B 100BaseTX [Cyclone]
> I/O ports at fe000400 [size=128]
> 00:12.0 VGA compatible controller: ATI Technologies Inc 3D Rage Pro 215GP
> I/O ports at fe001000 [size=256]
and Xorg.0.log says
> (EE) ATI(0): Unable to register the following bus resources:
>  0 0 0xfe000400 - 0xfe0004ff (0x100) IS[B]
It shows the problem, which makes Xserver unusable on these machines.
Mach64: kind of broken!
I expect this is resolved for free by switching to libpciaccess, and therefore not screwing around with the kernel's resource allocations. That error message doesn't even exist anymore, either in the server or in the mach64 driver.
So I'm just going to optimistically call this fixed and hope I'm right ;) Please reopen if I'm wrong.
Fair enough, I just pinged all my downstream reporters to try again with Xserver 126.96.36.199x.