I am not an OSx86 hacker, but target disk mode is in the firmware for a mac (and possibly the firewire chipset itself) to allow the hard disk functionality.
It only had any respect to the os on old ppc hardware.
i don't know why ubuntu wont boot from the cd. try re downloading it. as to booting holding down "alt" it will not show a partition without an os.
-- I currently have an ubuntu 7.10 install on my powerbook with leopard