-It's been like this since I got it, I haven't dropped it. Not sure about the previous owner though.
-No cracks around the hinges as far as I can tell
-There is considerable movement, especially on the right side.
-A magnet will pull out the latch.
-It seems like the hinge on the right side has something wrong with it, as the screen is slightly tilted to that side, and the screen 'pulls' to the right when it is closed.
Considering the movement you've observed on right side of the screen, its possible that the screen attachment retaining screws have worked loose (Ref. iFixit step 41) and/or wear on the locating dowls, but more likely that there's some wear/distress between the clutch hinges and screen frame.
This is not an iBook that I've ever had to dismantle, and you rightly say its looks a PITA. I've just been detailing the iFix repair guide, and the procedure for screen removal looks quite difficult, and futher screen disassembly - if required to access clutch hinges, adds to the complexity.
I'd welcome the opportunity to assist in such a task, but such is the design and fragility of the locating tabs between the top and lower case, and also inverter/display cable displacement to get access to clutch hinges, that potential handling damage cannot be ruled out. Definitely not one of the more SAV user-friendly models.
Just for info,
my iBook latches correctly and front edges are reasonably well aligned, with no discernable screen side movement, despite the fact that there's a difference in the gap between the right/left sides of hinge cover to top cover. Gap measured at 0.027" on left side, and 0.018" on right.