The answer to the original question is: No. You can't run virtual PowerPC machines inside Mac OS X right now. You can however run MOL (Mac on Linux) if you run YellowDog Linux to run Mac OS X virtually. However, that's not much fun. The question is whether you really, really need it. The Fink tip is quite good. If the linux package you need is there, just go ahead and install it. I don't know whether Fink's been updated for Panther yet, but I'd look there. http://fink.sourceforge.net/
Yes - you CAN install Linux on a VPC disk image and it runs just fine. Create a new VPC, select "Other System" for the type. Then restart the VPC with the Linux Distro CD in the disk drive and it will be recognized and the distro will startup and begin installation on your VPC. Very easy.
As Fryke said: You can't run virtual PowerPC machines insde of Mac OS X right now. The Linux you are talking about, bluehz, is a x86 Linux. I know, there is no huge difference...
One bad thing about VPC: $129