A friend of mine got this error when booting. (I pressed Cmd+V to view the console) The error is obviously a hard drive error. But is it physical or file system corruption. A little background: Right before this error the computer started running very slowsly, so we shut ti off with the power button. My analysis is that either the HD a physical error which manifested itself by slowing the computer down, or the forced shutdown corrupted the FS. I suspect the former. :/
We don't have access to a boot disk ATM, but when we do, will we be able to backup files to an external HD USB from the installer, or will it fail for some reason? (Ie no USB support in the install environment)

I would download ubuntu...put it on a disk and use the live cd to transfer the files....linux, from experiance, has a bit more luck at stuff like this. But I do think there is USB support in the installer.

Oh, this was resolved just a few days after the post. (I created this thread nearly a month ago now) It turned out it was a physical error. I ended up sing the Finnix live CD, which is one of the very few live CD's that work on PPC Macs. 

Oh cool!