Those sort of upgrades work fine, but think long and hard about whether the price is worth it.
Remember, even though you have a faster processor you still have:
- Slower RAM than modern Macs
- Slower hard drive connections than modern Macs
- Slower system bus than modern Macs
- Older video card than modern Macs
So if you do some kind of render in Final Cut, that will go faster because the processor is faster, but a lot of the 'day-to-day' things you do with your computer might not change at all, because these other components are limiting how fast they can work.
I'm not saying not to do it (I did it once back in the G4 days) but you need to compare this plan with the idea of saving the money and buying a newer computer next year. For example, wait until 2009 and then buy a used 2006 Intel model. A used, 3-year old computer might not cost much more than this upgrade will and I can promise you it will be a LOT faster!