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I've got an 896HD connected to a G5, and everything works perfectly in apps that are using the 'default system out' device. Meaning, iTunes plays perfectly out the 896HD like it should.

However, any app that uses Core Audio immediately stops all audio playback to the 896, and there is a very high pitched intermittent tone.

Things I've tried to fix it:
••• Update to 10.4.8
••• Re-re-reinstall the 896 drivers
••• Different Firewire cable
••• Disconnect other Firewire devices

Any clues? Has anyone else encountered this?

I have the same issue. It just started today. I used my 896HD to mix a tune yesterday and it was fine. Today, same problem as lord funk. Logic Pro tells me there's an audio-MIDI sync error. I don't know if that's accurate, but I've tried plugging into a different machine with the same result.
Any help would be appreciated.

Well, I hadn't done this yet, but it seems to be a corrupt pref. issue.
Go to your home folder>Library>Preferences and look for a folder labeled
com.motu.FireWireAudio and a similar one with CueMix in its title. Trash them. New ones will be created and all should be well. It was for me.

Hope that helps,
Scott