I don't know if it is possible to replace the mobo. Compaq were notorious about changing the hardware. I couldn't tell what form factor it is but I think it's ATX by the dimensions (19.0" x 20.9" x 8.38") It will cost about $200 for cpu, mobo and memory. You will need to upgrade your hard drive if you haven't so already, because Win XP takes up some space. And with the factory drive in (I'm guessing 20Gb) you'll see your space go PDQ.
As for your machine now, you will need to have at least 256Mb RAM. Your machine can only go up to 384Mb (3x 128Mb). I actually checked Compaqs site and that board in your machine only supports up to K7 700Mhz. There are cpus available that can run faster than the maximum speed (evergreen technologies I think).
So really it's up to you. Personally I could make a new one for $500 total including delivery with the components you need. If you are power user (not on it that much, only internet, email and word processing etc) then it will be lower.
Your information is outdated, any system that will take a 700mhz Slot a will also take a 1ghz CLASSIC k7a and maybe a Tbird if he's real lucky. (most will post with a tbird but may not be stable, the irongate is not a good match to a tbird though sometimes it works)
The info you are looking at on compaqs site was made when 700mhz was the top speed, hence why they say up to 700mhz, there was nothing faster back then
Also it seems that the 128mb limitation is not a real one I have read on other sites that people have successfully installed LD 256mb modules LOW DENSITY 16 chip in the older slot a compaqs.
Though it would be a case of he would have to try it and see and have a place that he could return the memory to. The AMD Irongate DEFINATELY supports greater than 128mb modules which makes it seem odd that they would list 128 as the largest module.
Also I agree he is better off with a different case as EVEN if the compaq has standard ATX mounting his PSU is probably not big enough to fire up a newer XP cpu and it isn't reasonably replacable as Compaq is notorious for making ODD shapes of power supplies.
Though I will say this, iff his psu is at least 250 REAL watts he can install a mobile Athlon XP and motherboard and it should work OK if it physically fits inside his case. But he won't be able to use the highest clocking of the chip or a normal desktop variety without possible problems.
Good Luck to the original poster