Yes, you may install two SATA drives of up to 2 TB each without trouble, but with conditions.
7200 RPM SATA rev. 2 drives from Western Digital (Blue and Black) and Hitachi (7K) are plug and play, as are 7200 RPM SATA rev. 3 drives from Hitachi.
SATA rev. 3 drives from Western Digital work fine as long as a jumper is placed on pins 5 and 6 of the drive.
No drive from Seagate is recommended due to a history of firmware conflicts and issues with the G5.
No green or 5200/5400 RPM drive is recommended for internal use in a G5.
SATA rev. 2 SSD drives may be used, but most reports of SATA rev. 3 SSD drives are of failure to communicate with the G5 controller.
SATA rev. 3 SSD drives should not be considered.
Any installed drive needs to be formatted to Mac OS X Extended (Journaled) and must be formatted using the APM partition scheme using Disk Utility of OS X.