There is a lot of good info in this thread already; I just want to add my $.02:
Go with the new Intel machine. I would reiterate the recommendation for the MacBook Pro for portability's sake, but the iMac is a damn good machine for a desktop. I wouldn't worry too much about the emulation: it's called "Rosetta," and it's built in to Mac OS X to run invisibly in the background. As a student, any performance hit that emulation might make on her workflow would be mostly offset by the architecture difference. This will be her "starter" Mac, and when she's ready for a more powerful machine (whatever they're going to call the new towers) a couple of years down the road, she can relegate the iMac to more pedestrian/utilitarian uses around the house.
As was stated before, the G5 isn't going to stop working any time soon, but if you're going to invest in an all-in-one system (which are typically not very flexible in the upgrade department), you may as well get the most bang for your buck.
Also, spend a few extra bucks and go for the 20". It'll be worth it.
If she's used to Windows, definitely get her a multi-button mouse (the Mighty Mouse is standard, but it's receiving mixed reviews, from what I can tell).
Mac OS X will not run on non-Apple hardware. Someone may hack it to work eventually, but the whole point of the Mac is that it's a great OS running on specific hardware...I wouldn't trust Mac OS X on a non-Apple system for anything other than geeky tinkering.
Adobe CS2 should run fine (if a little slower) in the Rosetta environment (remember, it's transparent to the user); I'm sure Adobe will release optimized versions for the Intel Macs in the not-too-distant future. Apple's Pro apps (Final Cut Pro, Logic, Shake), OTOH, won't run on the Intel Macs until their optimized versions are released in May 2006.
As far as where to find deals on Macs, the best places I've found are:
DealMac - a site that has literally saved me thousands of dollars over the past 7 or so years.
The Apple Store - there are links there to the education store, as well as the "special deals" section, where Apple sells refurbished equipment that carries the same warranty as their new equipment.
The Low End Mac Swap List - this is a subscription mailing list, but there are often good deals to be had on gently used or older equipment.
Which leads me to my last statement: there is no shortage of friendly Mac communities on the internet. To me, that's one of the greater benefits of being a Mac user -- there's never any shortage of people to help you find your way when you get lost.
(I'm currently a Mac help desk tech and I've been a Mac enthusiast for the past 12+ years, so take this advice however you like

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Good luck to you!
