well, I have OSX.2 running on a 333mhz beige G3 (with a 500mhz G3 upgrade card) so I don't see why not. (I added the card AFTER running OSX- it wasn't needed, I just wanted the boost)
What is the size of your hard drive? Mine was 6gb and I had to swap for a 9gb (I was installing classic too and it needed the "first 8gb" for OSX).
Put in a big HD and more memory (I have 384, but obviously more is better) and it should work no problem.
good luck!