After successfully hacking the iBook firmware and enabling the extended monitor functionality using an external monitor, I was completely boggled by why new application windows always appeared on the iBook LCD and not the external monitor I use as the main screen.
I toyed around with the display settings in System Preferences where you can specify the geometry of the two displays (e.g. how they are geometrically related to one another). It turned out that the Apple X11 (or the Quartz WM, more likely) prefers to place new windows on the screen that is geometrically higher than the other screen. By moving the LCD display slightly lower than the external screen in the display geometry, windows started appearing on the external screen. And all is well.
Mac OS X Hints
http://hints.macworld.com/article.php?story=20040107153354502