If the discs are coming up with a screen that looks like a frozen backdrop with text running over it - the restore discs u have won't run on the ibook. Pretty much forget them tbh.
In terms of formating, once u have an install disc, it'll boot to a kinda Mac OS lite desktop which has a bunch of utilities in the menu bar at the top. One being DiskUtility, which will do all the required formatting for u. U'll need to use Apple-Partitioning rather thatn GUID or MBR cos of the PPC chipset. (once ur in DiskUtility it's simple to follow)
Ur problem seems to be exactly that tho, u either need the correct restore disk for ur ibook or a retail copy of Tiger (I don't think the ppc cpu in a g3 is up to Leopard, only some G4s can iirc)
As for startup keys, here's a link to one of the lists, couldn't find the one I used to look at in support. Terminoligy is very similar to windows.
Wonder if an Apple store would supply u with a set of restore disks for ur model?
U could ofc google Linux ppc Gentoo? (I think) just to install it to see if it works ok.