http://en.wikipedia.org/wiki/Workstation
Aside from that, a 1Ghz G4 with 1GB RAM and early Radeon graphics with Tiger will struggle with flash content on websites. With the continually increasing usage of flash even as a browsing machine G3s and G4s are being rendered barely usable for online activity and it will only get worse.
Speed concerns are also encountered when playing back video files. So far most files commonly found are ok but the higher resolution and higher quality stuff is starting to choke these old computers.
If your idea of a workstation is playback of MP3s, MSN chats and a word processor with limited internet and video usage then yea, a 700Mhz iMac would work ok.
*Edit
Oh, and nevermind that the G3 iMac use a silly optical drive with the connector on the wrong side(compared to most slim ODDs). If you ever want to do something like burn a DVD then you are pretty much out of luck.
*Edit
Unless you use a USB drive over the USB 1 ports or FireWire 400.
USB flash drives = painful for the above mentioned reason. No quick transfers from a PC that is not networked with the Mac.