The monitor resolution of the Clamshell iBook cannot be increased under MacOS, even when connecting an external monitor to the Second Edition models, a higher resolution cannot be selected, as only the output of the built-in display is mirrored. The only solution is to swap the display and us a Firmware hack.
The built-in ATI Rage graphics with 4MB VRAM in the 300s and 366s of the first edition is simply overwhelmed with higher resolutions. Theoretically, the 8MB graphics of the later models with FireWire could display higher resolutions (see G4 Powerbook Titanium 400/500 MHZ), but the native resolution of the displays installed in the iBook clamshell does not yet play along. The frequently used utility Screen Spanning Doctor is only suitable for later Ibook series.
When installing Linux operating systems such as UBUNTU, which run well on the clamshells, a higher resolution can be selected, but important controls are then out of reach because scrolling is not possible. You can hide the dock in OSX, then at least visually there is more space