Yes, they can dual boot into Classic. When I had my G4, I was running both Panther (later upgraded to Tiger), and 9.2.2.
The 40GB drive has not been erased, or tampered with since the logic board failed on my G4 in 2008. So all of the drivers required to dual boot into the Classic environment is still very much present on that HD.
The weird thing about this unit is the green indicator power lamp does not remain lit when the computer boots, and on a cold start (i.e., the computer has been powered down for a few hours), I hear the startup bong, but no activity from either the HD or the CD drive occurs until after about a minute.
I'm not convinced that the fault lies with these components, but rather, as you said, what they connect to.
In regards to the PM you sent me, I'm not sure how useful the Apple Service manual will be, but I guess there's no harm in giving it a try. I'll send you my e-mail address shortly.