Many years ago, before there were Xserves, in an attempt to save rack space in our cabinets, we experimented with ripping the guts out of a PowerMac G4 and stuffing them into a 2U server case. Here is a photo of one of those attempts:
It worked out fairly well and we had a couple of these running for several years.
The main piece to the puzzle was finding the right L riser card to give us access to the AGP slot and 2 of the PCI slots, one for a secondary Ethernet card and another for an ATTO SCSI card.