Since you have the correct original 'install-restore system software' set the iMac G5 shipped with, that would be the best place to leave a restored system; then the new owner user could set it up on first boot. That's when you quit the Installer after it is done, and not let the system boot afterward. All the setup on first startup like a new Mac does, would be on the next start after you are finished. But no updates would be applied to such a system.
{Or you could set up the computer so it will boot and run, for demonstation purposes to show it works, but give it an anonymous 'iMacG5 Admin' main user account for installation & upgrade of the computer to 10.4(.11) so the new owner can see it does fine. And do not let it go online to register the anon user. Or help the new user become familiar with the system and have them learn how to install/update the entire thing with you there...}
The best thing about the original system, is the next owner will have the disc set with original OS and software that was included with the unit when new. And there is the official Apple Hardware Test in that set for the specific model build series, those are hard to get.
And the iMac G5 you have should be able to run Leopard 10.5.8 without trouble, since the specs are far enough into supporting that version OS X; and if the computer has at least 1GB RAM installed, but 2GB+ is better. But then again, if you have any Classic or OS 9 applications that ran under Classic in Tiger, they would be unable to work in Leopard 10.5 since Classic will not work in that upgrade X. If the computer shipped with a "CPU Drop-In DVD for Leopard OS X 10.5" Upgrade, that would be fine to include with the iMac G5.
Hopefully this helps...
Good luck & happy computing! 🙂