A 1.4 MB drive works just fine with 400 k floppies in 6.0.8. You just need to hold down the Option key while selecting 'Erase Disk' from the Special menu, and it formats as MFS instead of HFS, as Aoresteen's link says.

And using Disk Copy, even System 7.5 can read and write 400k disk images. I'm pretty sure Disk Copy can read/write 400k disks/images even Mac OS 8.1, even though the Finder can't mount the disks!