Substituting an ATX supply for the MDD supply is very doable, but there are two issues.
First, physical fit. The MDD supply is long and low, not boxy. With some hunting you can probably find an power supply with ATX outputs that will fit in the MDD. It will require some measureing and hunting, and don't forget that you want the power cord connection to match up properly on the back too. Some folks remove the MDD optical drive and just install a boxy ATX drive and that works too, but involves sacrifice.
The second issue is electrical. ATX supplies have no 28V supply. This is primarily to supply connected ADC displays and absent one of those, you're mostly okay. However, I have also read that the 28V supply plays some part in the use of the Firewire port. I'm not sure how accurate this is, as I've never tried it. Years ago, one fellow posted a nice little voltage boost circuit to convert a portion of the 5V Standby current to a 28V line.
Now days, it's simpler to get one of these:
http://r.ebay.com/i96eq2
This is a DC-DC boost circuit. It supports inputs of 3V - 32V and outputs of 5V - 32V.
It's less than $4 from China.
If I was replacing an MDD power supply with an ATX, I'd get one of these, and hook the input side of one of these to the 5V standby of the ATX power supply and the output side to the Logic Board 28V input, and adjust the thing to output 28V. I've read that 24V will work well enough so you could use that setting.
If I wanted ADC support I'd add one of these:
http://r.ebay.com/p6XlaX
(Slightly less than $5 from China.)
and a couple or four diodes. Then I'd hook this thing's inputs to the 12V output of the ATX supply (modern ATX's have lots of 12V capacity), and the outputs (through a couple of diodes) to the Logic Board's 28V input and adjust this to output 28V. Add the remaining two diodes between the previous device's outputs and the logic board.
The diodes are there to prevent current from flowing backwards from one boost circuit to the other, since they're both hooked up to the same pins on the logic board.
Why two boost circuits?
The first one does not have enough capacity to run an ADC monitor. It just can't output/convert enough power. Oh, it can probably do a small one, but it's kind of whimpy and the 5V standby can't supply enough power either. You could overcome the latter issue by connecting the regular 5V supply as well as the 5V standby to the inputs of the boost circuit. You might need more diodes there, though. I'm not to sure about the prospects of shorting the 5V standby to the regular 5V circuit. Then again, the power supply itself may do that after power on. I don't know.
The second boost circuit has plenty of capacity but its input range does not include 5V, so it is not useful for supplying the Stand-by 28V.
"Stand-by" means the voltages/power that is available to the logic board even when the computer is "off".
So, you need the first boost circuit to convert and supply the Stand-by 28V and the second boost circuit to convert and supply the operating 28V.