The 320 MB maximum is the one in the Apple spec database ie the maximum possible when the machine was new based on the memory module sizes available at the time - 512 MB modules that fit in there are now available so the maximum in your machine is 576 MB (64 MB soldered to the logic board and a 512 MB module in the single expansion slot). However, a 256 MB module in the slot performs well enough for basic tasks under OS X in my experience so it might not be worth the extra cash for a 512 MB stick.

I did put PC133 memory in my dad's one and it works, even though someone in a shop told me it can only accept PC100, which seems to be unobtainable nowadays.