Well if the Imac is not your main machine I would recommend OS 9. A g3-233 with low memory is not exactly a good machine for OSX but should be speedy enough for OS 9.

I think the browser limitations only matter if you do not have another machine to do the heavy internet work. Still with IE5 or icab I can browse the web ok using a Beige g3-300 with 768MB of RAM when I need something.