After some frustrating efforts I realize quite a few things. The USB implementation of the ZIP technology is not nearly as reliable as the actual SCSI implementation. When I say actual, I have a PC MCI SCSI card for use with my PowerBook G3 – this got me further than USB & OS X or even 9.2. I then moved on to a real SCSI Mac running 8.6, which only froze up when trying to mount a bad ZIP (or at least whatever OS X did to it). Finally, I moved it onto a Mac Plus with a 4.2 driver and the Plus running 6.0.3 which happily reformatted the disk upon insertion. I still can't get one disk that OS X claimed needed "minor repairs" to be recognized, but it doesn't lock up the Mac like the others. Going to install a System 7.5 in order to use Iomega Tools and see if that makes a difference.
This disk now easily mounts within SheepShaver and I can read and write to it. FYI, if you fail to unmount the ZIP disk in Terminal or Disk Utility, the volume shows up in SheepShaver in read only mode, so it appears relatively trouble free. Would love to know if a USB Floppy drive will achieve the same functionality. Anyone set up to test this?
It strikes me that one must be very careful with USB-based media and OS X, especially when it was designed for use in an earlier era. WIth ZIPs in particular, it would be prudent to format them in the vintage equipment they are intended to be used with. OS X seems to have little trouble mounting them otherwise. SheepShaver seems to handle working with real ZIP disks without any troubles, but only time will tell – especially when performing system installs. I still need to try some "dd" image-to-disk tests, but if SheepShaver turns out to be trouble-free, then it may not be as important to do it this way. However, "dd' may still be the only way to get floppy disks output if USB floppies fail to mount under SheepShaver.