I successfully compiled, simulated and debugged PowerPC G5 iPhone devices for each version of the iPhone SDK, but not including the iPhone SDK 3.0.
You only need to edit two things: change the Xcode script installer so that the installer installs it on PowerPC and change the default Simulator configuration , so it considers PPC to be the real target architecture of the simulator.
Sometimes it can be installed on a device from PPC, but it will work.
For iPhone SDK 3.0, Apple has not built Interface Builder components with PPC code. This means that it is impossible to use (without hacking or a workaround) the SDK 3.0 developer interface. The fun in creating and running iPhone applications on PPC will end soon - probably Snow Leopard, where Xcode itself is likely to lose PPC code (not that PPC users will run Snow Leopard anyway, but Xcode's update for Snowless Leopard will end )
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