Sort of like an iMac versus a B&W the Pismo is more open and upgradeable....also more powerful.
Easy to change drives, more RAM capacity, faster ( 1 meg cache ) dual video, PCMCIA port. plus of course a bigger screen.
If you think they are similar in processing power, I suggest that you consider the size and weight. I don't know about others but when it comes to laptops, the latter two are more important to me than slight processing power advantage.
I would try to look for an iBook 600 because of its system bus. The 500 is only 67 MHz as opposed to 100 MHz. Also, if you decide to use an iSight with iChat AV, you need G3 600 or more.
I'm not saying you should go with the Pismo, but one of the cool things you can do with those is take out the DVD-Rom drive and put in a second battery. It makes it heavier, but gives it 8-10 Hours battery life! (by Apple's specs, actual usage would be probably 6-8).