I have a Powerbook G4, Mac OS 10. Is it possible to use AGS with it, or is it just Windows-based?
It is just windows based I'm afraid. No port to OS X is planned for the forseeable future, not for the editor at least.
Could I run it using the Windows Virtual Machine emulator?
www.microsoft.com/mac
Yes, Rodekill made at least one AGS game that way. I don't know the technical details of doing it, but it does work.