What finally worked for me was changing the wireless channel on my Netgear WGT624 router. MacStumbler showed me that 5 nearby wireless networks that were accessible from the living room are using channel 11. Three wireless networks were using channel 6. I changed mine to channel 2.
Now I can stream music perfectly with no skips or pauses in music from the iBook to the stereo in the living room (and out to the deck).