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Connectix sells a version of VPC that comes with PC-DOS. No Microsoft tax involved. They could also throw in x86 Linux at no charge. Why run x86 Linux in emulation when PPC-native Linux is available? I can think of two reasons: the ability to download compiled binaries for x86 Linux; and the ability to have your Mac running Mac OS and x86 Linux simultaneously.

My Suggestion to you is to just plain wait. Since its your home, data backup should not be critical, yet.
I am willing to bet that 18months down the line u can pick up a DVD-RW for $300 and 8.5gig Double Sided DVD's for about $5/piece. I would say that unless the data is absolutely critical, wait. However, your cheapest and easiest bet (i think) would be a large firewire 200GIG Raid array (yes they make them. check MacMall (they should work for PC's too).

Good Luck, and if u read this let me know what you use and send me an email, i'd be interested in this myself a few months down the line. AJ