Don't forget the virtual memory aspect of OS X. Since virtual memory is always on with OS X and optional on OS 9, your hard drive will be taxed and your speed may suffer. Running one application with 512MB+ may not cause much of an issue, but try running a heavier hitter or multiple apps on there and you'll encounter slowdowns. This is especially an issue if you have a slower hard drive. Even the stock drives in later iBook G4s are too slow to run OS X nicely--you'll want something faster than 4400RPM.

As I said in another thread not too long ago, the 9/X debate on G3s will be a lot like the 6/7 debate on 68000s was back when some fairly current software packages still ran on earlier versions of 7.x.