My B+W G3/450 runs Panther just dandy... it is at least
as fast as OS9, and some things feel slightly faster.
And I'd definitely put Panther on it rather than Jag, as every machine I've used Panther on (including my old iMac 266...) runs it faster than what it runs Jaguar... besides, even if there was a slight speed penalty, I think Panther would still be more worthwhile than Jaguar, just because of the host of features it has that Jag doesn't have... Not to mention that it seems like a much more user friendly interface.
My machine used to be a 300 when I got it, and I put a 400mhz ZIF in it and clocked it to 450... but even at 300 it used to run Panther very nicely with the 256Mb of RAM that it came with. Of course, faster is always better, so if you can overclock (at least 350 should work) or buy a cheap 400 or 450 ZIF off ebay, then go for it...
My philosophy is that any Mac with a G3 or G4 should have 256Mb RAM or more... and as and any G3 or G4 with that much RAM is capable of running Panther perfectly well, every G3 mac should have it installed on it... just my humble opinion of course.
I'd seriously recommend you put Panther on your machine... you won't regret it a bit!... it will make an excellent machine for everyday use as it is, and it'll even do pro-type work well with a few upgrades... I regularly use mine for DV-editing work (with 512 RAM and a 40Gb HDD that is...)