What caused the iBook problem?

I'm writing this for my wife, as she's unable to use her iBook for more than a few minutes before it locks up.
I'm serving in the military overseas. My wife and I both use Apple products to chat, email, etc. When I spoke to her yesterday, she was frantic. Her iBook G4 apparently started making a strange noise and then stopped working altogether.
I asked her what she had tried, and she explained that she spent over an hour on the phone with Apple support (I knew AppleCare might come in handy). The first support person she spoke with was, for lack of a better term, an idiot. This was confirmed by the third support person she spoke with. I'll explain later.
The problem was that when she tapped her spacebar to wake up the computer, it didn't wake up completely. She got a grey screen, Apple logo, and that was it. I told her to be patient, that maybe it was reseting after an update (that was before I knew about the 10.4.6 update being available).
Her computer auto-updates every Monday.
I had her turn off the computer by holding down the power button. I then had her disconnect the power cord and remove the battery. I did this on a hunch (just in case the computer had a heat problem). She reconnected the power cord, pressed the power button, and it was back up and running - for about 5 minutes.
Then the computer began making a not-so-funny noise again, and the spinning-beach-ball-of-death reared it's ugly head and wouldn't go away.
The first support person had her use the install/boot disk that came with the computer. That was Panther. We're using Tiger. Bad idea.
When the boot/install disk did not appear to be working, the first support person had her abort, and she was prompted with little phrases like "are you sure you want to quit, doing so now may damage your files" or something like that.
He just had her keep clicking "OK" and eventually got tired of talking to her and told her the hard drive was bad and that she was SOL.
The second support person was apparently too busy to troubleshoot any further and cut directly to "sorry, you're SOL".
The third support person was a little more helpful in that he talked her through connecting the iBook to her G5 PowerPC iMac to attempt pulling the files over to the iMac (she had already resigned herself to the fact that the iBook hard drive was on it's last leg).
She had asked the first support person about doing this and he said that if the files were corrupt on the iBook, they might corrupt the iMac, and that it was a bad idea. Not a very bright guy, considering the files would be copied to a folder, and wouldn't overwrite the iMac's system files.
She started to transfer files and the iBook froze again. She repeated the steps I had her do earlier, managed to get a CD in the the drive, copied a few folder successfully to the CD, checked the CD to see if the files were there (success!) but then the iBook died before she could get the CD out. She's working on holding down the track pad button while rebooting to see if it'll spit out the CD as I type this.
So, in addition to wanting to know how to resolve the problem, I'd like to know what caused it.
What caused so many people to have alleged hard-drive problems within a day or two of each other?
Is this Apple's first virus?
Is this the work of a disgruntled Apple employee working in the updates department?
Is this an evil Apple plot to force us to by MacBook Pro's that won't run Virtual PC?
Will running the 10.4.6 hurt or help the situation?
Why is there such inconsistency in Apple support and aren't they supposed to log their trouble-shooting steps performed thus far?
My wife has been using Mac's for over 9 years. I've only been using them for 2 years. Up until now, I've had a lot of confidence in Apple to be a solid platform, even if not the fastest platform. This experience is not inspiring me to purchase another Apple computer.
PowerBook G4 1.5Ghz 15   Mac OS X (10.4.6)   iBook G4 1.2Ghz 14, iSight, 23" HD Cinema Display, LaCie d2, iLap, nano, Airport Express

Hi Robk64,
You might want to look at...
Knowledge Base Document #106214 on Troubleshooting Startup Issues
Knowledge Base Document #58583 on How to use FireWire target disk mode
Knowledge Base Document #106941 on Mac OS X: How to back up and restore your files
Do you have the Tiger Install Disc?
Her files probably won't fit on a CD; unless she has less then 700Mb.
1."Is this Apple's first virus?"
2. "Is this the work of a disgruntled Apple employee working in the updates department?"
No, I don't think so. Apple tries these out to try and avoid problems with their updates. Things happen that are not expected. They wouldn't put anything out unless they thought it was ready.
3. "Is this an evil Apple plot to force us to by MacBook Pro's that won't run Virtual PC?"
First off, look at #1 and think about what platform is notorious for virus problems (Mac has had not had any virus out breaks so far). There have been some "malware/macro" software that was meant to mess with Apple Computers. The most recent that was was over exaggerated was nothing special; MacWorld worked pretty hard to get it to effect their machine. As long as you know what you are downloading and where you are getting it from, you should have no problem.
If you want VPC to work on a MacBook Pro; don't look to Apple. You should talk to Microsoft's Mac Department because Apple announced the Universal Binary switch a long time ago (with developer help) so that software companies could make the switch easier. If anyone is to blame; its Microsoft [they are busy working out their problems with Vista; I am guessing it will be awhile before you see VPC for MBP;) ]
"Will running the 10.4.6 hurt or help the situation?"
My opinion would to just reinstall Mac OS X after backing up the hard drive. That would probably fix your problem. Once OS X is installed; update the software.
"Why is there such inconsistency in Apple support and aren't they supposed to log their trouble-shooting steps performed thus far"
Once in a while Apple's personnel may make human errors. The second one you talked to may have seen her work-up and just reiterated what was said. They have resources we don't, but they can't really go beyond them because they can't see the product, and they are just call support. You may have to send it in.
So in 9 years, you have had this one problem. We can't really tell you what is wrong with the computer because we can't see it ourselves; we can only give suggestions/ideas. Tell them her story, explaining her situation (military etc) and then see if they can help. She may want to bring it into her local Apple Store/Reseller. She can make a reservation on the website or at the store. She can get better feedback in person.
Just some of my thoughts,
Mac Mini 1.42Ghz, iPod (All), Airport (Graphite & Express), G4 1.33Ghz iBook, G4 iMac 1Ghz, G3 500Mhz, iBook iMac 233Mhz, eMate, Power Mac 5400 LC, PowerBook 540c, Macintosh 128K, Apple //e, Apple //, and some more...  Mac OS X (10.4.5) Moto Razr, iLife '06, SmartDisk 160Gb, Apple BT Mouse, Sight..