So will the G5 work with another HDD (compatible interface) I get from the store or do I have to pay an extra $500 to get one from an Apple store?
The G4 runs happily with a non-Apple external hard drive, either connected directly via FireWire or USB, or through my backup Time Capsule wi-fi drive.
Your Mac will work fine with any external USB or Firewire drive. You might want to format the drive in a PC file system (they usually come that way) so you can take your pictures to any machine. The Mac won't have a problem with that.