If I have a small mixer connected to the device that hooks into the SPDIF, would I then be able to record more than 1 stereo or 1 mono live source simultaneously?
yes, kind of.. if you have a mixer connected to the input, you can record as many channels as you have coming into the mixer -- but -- they will all be recorded mixed together on the same mono or stereo track. you won't be able to record say eight live instruments at once and have them come in on separate tracks into logic.
-- you can't overcome the physical limitation of the fact that the spdif i/o on the G5 is only _2 channel in_ and _2 channel out_. so, using the spdif is only appropriate when you are never intending to do live multitrack recording.
personally, this way of working suits me fine. even with a protools HD3 system with 16 channels of physical i/o, I never ever record more than one stereo or mono source at a time when working on my own stuff. I have the option there if I need it for other things, so you could hang on to your 002 for the same reason if you want..
I think a lot of people want to keep this option open because they are worried that someday it might be a problem, but honestly, in a project studio environment... how often are you recording bands?? if you have a bass player and singer to record for a track, how hard is it to track each of them one after the other, giving your attention to each as you go along? I find that a lot of users cling to having the option for multitrack simultaneous recording for no real reason - they just feel like they are supposed to have it even though it doesn't ever come up in the way they work.. it's up to you to decide whether you will be limited by this or not.