I've installed OS 9.0 from iMac install media onto a beige G3 and experienced the same problem. The solution was to use the generic 9.0 install CD. You may be able to fix it by twiddling around with ATI extensions -- but I don't think you're getting that far.
Can you create a generic installation on another Mac and then swap the disk?
Can you create a generic installation on another Mac and then swap the disk?