I was able to boot to USB on XServe G4. I was using the "memstick" bootable image I obtained from FreeBSD
I inserted my USB stick into the first usb port (in OF, it is known as "usb0") Note, this has to be done directly for some reason; you can't insert the USB stick into a hub. So, I have the USB stick inserted directly into the XServe and the mouse and keyboard in a hub. By the way, I am using a plain ol' 1GB San Disk Cruzer. You don't need anything fancy.
When I booted the XServe G4, I held down the the Altkey (I was using a PC keyboard, the Apple keyboard equivalent is Option)while the powering on, and the XServe started looking for all the possible boot devices.
After about a minute, it found the USB boot partition (as well as the other boot partitions installed). . The first drive is the FreeBSD Boot partition (I had already done the install using this method). The 2nd is the FreeBSD USB Install, the third is the OS X partition that lives on the same drive as the first and finally, I have a drive with OS X install instead of using a CD-ROM. (It was much faster this way)
Select the device and click the arrow; in this case, select the USB drive. You will then see the boot messages:
After about a minute or two, you should be able to proceede with your install: