I think we need more information... I don't really understand what you want to accomplish.
You have a Powerbook (as opposed to an iBook) G4 hooked up to a 23" ACD via DVI, right? And in the display preferences, you have unchecked the mirroring box, so that you have two discrete displays showing different things, right? You've assigned the menubar to just one of them (no way around this), and then the other one has been placed in the virtual space above, below, or to the right / left of the main screen? With me so far?
Now, what do you want to do? Do you want the single window that has the Illustrator doc in it to be stretched across both displays? This should be readily possible -- just start resizing it and then drag into the other window. Or do you want the palettes to be visible on both windows at the same time? That's not possible, AFAIK.