Sure, it will install and run. But it will be slow, and it will not recognize a G3. Having a fat L2 cache will help things a bit. If you want ethernet, you have to use a PCI card (the CSII isn't recognized). On board video is the same as a Rev A G3 (slow to begin with, and not accelerated in OS X), so if you want good video, there goes your other PCI slot. Fortunately, ADB works fine, so USB is not a requirement.
For more, check out my stale thread on this:
http://www.ppcmla.com/forums/viewtopic.php?t=164
Peace,
Drew