I have a similar setup with my 5300cs. Instead of an Ethernet card I use a WaveLAN PCMCIA Wifi card from ebay. (Not a Dell or Proxim card). With that I can get online with System 7.5.5. My "rescue disk" is a 32MB SD card in a PCMCIA adapter! (from dx, of course.) I also replaced the internal HD with a 1GB CF card and adapter. I think I initialized the disk while booted from the SD card, and installed to it from a disk image mounted over AppleShare.

I find System 7.5.5 to be a little unstable, freezing and bombing often. I might have some corrupted system files. With OS 7.6 installed, I get "bus error" on boot. I will try OS 8.1 next. I like to try the older versions in the hopes of having a faster system.

Have you had success so far getting online and getting OS 9 installed?