Finally managed to get avarice installed on the new iBook. Just so I can remember for next time this is what I did. ( as root user)

- Install libbfd
cd binutils-2.16.1
cd bfd/
./configure --target=avr --disable-nls --enable-install-libbfd
make
make install


- install Libiberty
cd binutils-2.16.1
cd libiberty/
./configure --target=avr --disable-nls --enable-install-libiberty
make
make install

- install avarice
cd avarice-2.3
LDFLAGS="-L/usr/local/powerpc-apple-darwin8.2.0/avr/lib -lbfd" CPPFLAGS="-I/usr/local/powerpc-apple-darwin8.2.0/avr/include" ./configure
make
make install

( all other AVR tools handled by Fink)
(also applied butterfly corrections patch to avrdude 5)

Thanks Frodi Hammer http://www.mip.sdu.dk/~frodi/mac.html