Hello again helenmat 🙂
WEP, WPA and WPA2 are encryption methods used to secure your router from outside intruders. WPA and WPA2 are much safer options, as they are not as easily crackable. If your router password to connect wirelesly was something like "0816775984", It would be much harder to figure that out using WPA/WPA2. Since your router is already set to WPA/WPA2, your all set on that side if things. Just might have to see if the router is set to mixed mode, not for G or N only. You did not say the router model, so I can't be for sure which one it is.
You are correct, it will NEVER work with 10.0.3 on WPA. You can, however get it to work by switching your router encrption to WPA, but I seriously advise against doing that. It's not worth it. Besides, you would have to reconfigure the other working Mac's in the home. You said it came with OS 9.2. That's a great OS to use to play classic games and use classic apps. The specs you gave me for your iBook would run OS 9 beautifully. I can even give you info on a browser to use for it that is mostly up to date, called Classilla, which is a sister project to the above TenFourFox I use on my iBook using 10.4.11. Just plug a wired ethernet cable into and call it day. You could also do that with 10.0.3, but I guess that kinda defeats the purpose of a laptop right?
If I were you, I would max out the ram in your iBook and install Tiger, OS X 10.4. You would make a nice little web surfer out of it. I'd skip 10.3 completely.
Here are the details on your iBook..
http://lowendmac.com/pb2/12in-ibook-g3-500-mhz.html
Please let me know if I can help you further. Good Luck!