What is the best Compressor setting for best quality video playback on an iBook g4?

I know the iBook and G4's in general are very outdated today, but I need to ask anyways. I have some video projects in 720p and 1080p in which I have down converted to 480p and also exported to MPEG-2 for DVD (personal wedding videos and videos made for my clients using Final Cut Studio). Anything encoded at most resolutions using h264 won't play on my iBook. Even 480p.
I have about 20 hours of mixed video content that I need it in a format that is suitable for an iPhone 4 and an iBook 12" with a 1.2GHz G4, 1.25GB RAM and I added a 250 WD 5400 IDE hard disk (running 10.5.8 and 10.4.11 for Classic Mode). I know the iBook doesn't seem like the best tool for modern video playback, but I need to figure out which setting will play best with iPhone 4 and iBook so I don't need to make 2 local copies of each video for each device.
The iBook plays best with the original DVD output MPEG-2 file and playing back in QT Pro or VLC... but I already have 180 GB's of MPEG-2 files now and my little HD is almost full. I don't have enough room to convert all the iPhone 4 counterparts. If I use Compressor 3.5.3, what is the optimal setting for iBook and iPhone .m4v or .mp4 files that can play on both devices? So far 720x400-480 widescreen videos @ 29fps works great on my iPhone, Apple TV 2, and other computers but seems to murder my poor iBook if encoded with high profile (and still choppy on simple profiles). 640x480 (adding black matte bars to my videos) plays fine in MPEG-2 but drops frames or goes to black screen if I convert it to mp4 (and looks bad on the iPhone 4 because of the matte). But if I convert on any of the simple profiles, it looks terrible on my iPhone 4 and a blocky on the iBook.
This is the problem leading me to having 2 copies of each video and eating my hard disk space. What is the best video setting for both playback on the iBook and iPhone 4? Can the iBook playback H264 at all in decent resolutionsat all? I don't really want to have a 480p .m4v collection for the iPhone 4 and a MPEG-2 RAW collection just to play the same videos on the iBook.
Any suggestions are greatly appreciated! Thanks!

Update: The iBook can play any 480p video and higher if I encode them with DivX and in AVI format. But of course this is not compatible with my iPhone 4. At least I can shrink my library now and get away from the full MPEG-2s. I don't get why I can't use Apple's h264 though. There has to be a setting I am missing. The sample Apple h264 videos from the days of Tiger worked flawlessly on my iBook when it was new so the CPU must be capable of decoding it. I really can't understand this.
Also, since I made my videos in English for my family, I had to create soft subtitles for my wife's Chinese family, and I can't get players like QT with perian or MPlayerX to sync them properly to an AVI encoded with DivX, they only sync well with the iPhone 4 m4v/mp4 formatted files I made. This is a real pickle.
So now I may need three or four copies of each video, LOL. I need to hardcode the subtitles if I want to use AVI to playback on older machines, and keep the mp4 file for the iDevices too, while keeping higher quality h264 videos for my American relatives...
If h264 is compatible with my iBook, what is the proper encoding settings? Must I dramatically lower the settings or frame rate? I can settle on 2 copies of each video that way. One iBook/G4/eMac compatible video that syncs correctly with my srt soft subs, and another version that works well with my iPhone 4 and iPad.
All in all, I will end up with more than 3 or 4 version of each video. On my late G5 dual core I have the full 720-1080p uncompressed master files. On my i5 iMac I have the h264 compressed versions for distribution, and lower versions for my iDevices. Now I need to keep either full MPEG-2 files for the iBook to play, or convert to older formats like DivX AVI for our family's legacy machines. I am running out of hard disk space quick now, LOL.
Is there an easier way?

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Also, since I made my videos in English for my family, I had to create soft subtitles for my wife's Chinese family, and I can't get players like QT with perian or MPlayerX to sync them properly to an AVI encoded with DivX, they only sync well with the iPhone 4 m4v/mp4 formatted files I made. This is a real pickle.
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