Aparently while I wasn't looking Apple dropped the whole "Apple supported" bit in Tiger (OS X 10.4) and iLife '06 (this may also work for iLife '05), so so far as I know, you should be able to use any DVD recorder - internal or external - with iDVD (and for playing or ripping DVDs or burning DVD-ROMs from the finder).
As has by now been widely reported, a hack likely used internally by Apple for debugging and/or QA has leaked out. It purportedly allows you to use any DVD-R drive over firewire (probably also over USB-2) with iDVD. Go check out the details.
I suspect this little loophole will be closed with the next release of iDVD (or at least modified).
Found an interesting entry on MacSlash. It describes Sizzle, an alternative piece of DVD authoring software. It's rev 0.1, and it's in no way as visually sophisticated as iDVD or Final Cut, but it's not crippled to only work with Apple hardware either.
A while ago, there was much news about the fact that someone who worked at an Apple reseller figured out how to hack iDVD to allow 3rd party drives to work.
Things may have changed now that iDVD has been updated to 3.0.
I have a SuperDrive in my TiBook, so I haven't researched this at all, but I thought I'd open up a category here for it.
If anyone figures out how to make iDVD work with 3rd party drives, I'll be happy to post the details here. You can either remain anonymous or I will give you full credit - your choice.