Spotlight also uses a bit of RAM, it also has the insatiable ability to grind any older Mac into the ground when you first install 10.4 because of the initial indexing process.
My biggest concern would be that the Pismo, unless you have upgraded to a modern hard drive, has a slow hard disk with little cache, meaning swapping to and from disk will run it into the ground if you overdo it. Also if the hard drive is original I'd be nervous of that much stress - older laptop drives don't like being accessed constantly - they get very hot and are not built for it (new ones get hot too but they are designed to). It might be worth installing something like a SMART disk monitor to keep an eye on the drive and make sure it isn't going to go bang on you.
Generally speaking it's 'OK' with 256MB. Keep the number of apps you open at once down to a minimum and be concious about what you run on it. Every day stuff like Mail will be ok but even Safari will give it a hard time.
Your best bet is to see if you can find a 512MB SO-DIMM for it (should be PC100 IIRC). It shouldn't be too expensive. All my PowerPC OS X boxes are running on 768MB and all seem perfectly comfortable (in some cases even more so than my Mac Pro with 1GB!)