there are several different ways to do this. One way is to boot the xserve into target mode, attach another computer and run the installation from the other computer connected. Then just pick the g5's hard drive as the destination.
Another option is the remote installation utility that is included with OSX Server. You can find out more information from apple's website (the server resource pages) on how to do this one. the nice thing is that this can be done from across the network. it takes a few more steps to start the process off, but once you do it is very easy. (You would need to use disc utility to clone the server installation disk to a partition on the firewire hard drive instead of using a cd/dvd drive. then boot the server to the hard drive and run the remote install.)
finally, if you would rather have local administration on this later on too, you could get a video card that supports OSX. Since all you are doing is GUI administration, don't worry about how many megabytes the card is - it just needs to have the right connection (i am guessing pci). If it will work in the xserve, then that is all the qualifications that you need.
Hopefully this helps
