hello,
If it has a Kernel Panic, then there has to be some hardware problem that maybe Ubuntu has not detected.
What I suggest is first resetting the PMU and then trying the installation again.
I think maybe the 512MB of memory could be at fault here. If you have a 256MB memory try replacing it and then start the install again. When you had Ubuntu installed, did the 512MB memory Plus the 64MB built-in (576MB) shown under system? Ubuntu may have just used the 64MB of memory.
I've had difficulty myself with a single stick of 512MB memory on a Clamshell. You would need to make sure the firmware has been updated to accept this upgrade.
If the new OS X being installed does not detect the 512MB, then it assumes you have 64MB and wont go any further with the installation. I've known it to hang on a blank screen after the Apple Logo when a module of memory has failed to initialize.
From what I recall, Mac OS X 10.3 requires a min 128MB memory to install.