i just checked again by plugging the external into my ibook g4 and checked how it was formatted - mac os extended (journaled).
Then the 3GFS software is not required at all.
i have an idea, not sure if it will work and it will have to wait a couple days until i get my firewire back from a friend, but this is what i'm thinking: my intel imac has a 1tb hard drive. could i use target mode between my imac and ibook? with my ibook i'd attach the external hard drive, then using the firewire and target mode start it up. hoping that the ibook hard drive and the attached external hard drive would show on my intel mac for which i could copy over the external back ups onto my imac. once completed, i could erase and reformat the external on my ibook and then try again on my imac to see if it appears on my desktop. do you think this might work (even though it is correctly formatted already?)
I use Target mode on a regular basis for mounting the internal drive on a Mac to transfer or salvage data. I don't know if you will be able to connect to an external drive on the Target computer. There's not usually any reason for this and I don't know if the Target Mode will enable the Logic board to deal with the USB ports and transfer data. I kinda doubt it, but other more experienced users can jump in here.
I don't think the problem with your external drive is the format, since you've already checked it and it is already formatted for a Mac. Intel Mac's will mount drives formatted by a PPC Mac with no problems, unless your OS doesn't support the chipset in the USB case that connects to the drive. There are some USB drives that are known to not work well with SL but worked fine with Leopard.
You can buy a cheap USB case (about $30) and move the drive from the old case to the new case, or buy a USB to IDE adaptor cable (about $20), or you can buy a larger external drive that will work on the iMac and use the G4 to transfer the date from the old drive to a new one. Or you can take both drives to a friend with a Mac and use Disk Utility to restore the USB drive to a partition on the Firewire drive. That doesn't fix the USB drive to work with your new Mac, but unless the vendor comes out with a firmware fix, I think that's a lost cause anyway.
other than the above, i may just go buy a 1tb time capsule,
I would not be getting a Time Capsule to back up a single computer. Wireless backups are a lot slower than FireWire or USB (of course, it's the initial backup that takes so much time). If you do have several Mac's that need a TM backup volume, then the Capsule can help you out. It is supported by Apple (and there are a lot of users here in the forums). I'm using a ReadyNAS device for network backups, but it is not supported by Apple, and I have to rely on NetGear for fixes if an OS update breaks my backup system.
BTW, it's a good chance that a TC device will be able to see and mount your USB drive. The incompatible chipset problem with some drives seems to be limited to the USB drivers in SL which the TC is not running. That's why I said that a USB hub may also let you see your drive, the problem is there's no guarantee's...