When it comes to 10.4, that's correct for that particular Mac.
Only 10.3.6 gray iMac G5 discs, 10.4 black Mac OS X, and 10.5 black Mac OS X discs will work with that particular series iMac. By the way, if you get the 10.4 or 10.5 black Mac OS X discs, you won't get Appleworks, nor will you get the games, nor will you get the iLife that shipped with your Mac, nor will you get the Classic environment installer you'd get with the 10.3.6 gray iMac G5 installer discs. For the iLife which shipped with your Mac, see this user tip:
http://discussions.apple.com/thread.jspa?threadID=1490798&tstart=0
If that's important to you, insist the original discs with 10.3.6 on them is shipped to you from the original seller.
Message was edited by: a brody