I've fiddled with OS X and XPostFacto on a number of beige G3s, and my conclusion is that you should use either 10.4 Tiger or 10.2 Jaguar. There's no reason ever to use 10.3 Panther with it (unless of course you have Panther disks lying around and you don't have Tiger).

In my experience, beige G3s are either totally stable with XPostFacto-based installs, or totally flaky to the point of being unusable. Whether the install is Panther or Tiger makes no difference.

So install Tiger with XPostFacto. If it works, great. If it's a disaster, then it will be a disaster with Panther too, so you might as well wipe the drive and drop back to Jaguar (which is supported natively and doesn't require XPostFacto).

So either way, there's no reason to use Panther.

M