theoretically you can, but the classic design has no slot for it, so you'd be cutting your case open. Also i'm not sure how much room there is between mobo and keyboard in there.
USB 1. is to slow for video playback, but an USB connected DVD will work for reading CDs and DVDs for music or Software, and it will work for burning if the OS on the laptop supports the device.
i use an external cd/cdrw with mine and it's fine, a little slower than normal drives, but it will work.
Just note you cannot boot off of it to install an OS.