Intel say it's SSE3, iTunes does the bounce'n'quit thing.

Dunno if it's iTunes or SSE3 causing the problem though, I'll get back to you with more after I've played more.

It definitivly has SSE3 cause up to system 10.4.7 it was reported in system profiler. System 10.4.8 (with mifki kernel) doesn't report the features anymore.
Neither under 4.7 nor under 4.8 i had any issues with iTunes.

After a little while getting used to it (and a reinstall from a trusted 10.4.6 disc) I can report the Celeron D 346 operating fine out of the box. No need to worry. Looked like I had some SSE2/SSE3 emulation things going on in the kernel that were breaking it.