Dude, i got a G3 Clamshell just under 2 years ago (The last SE model, 455MHz, 500-600MB RAM, 10GB hard drive. Came with Panther/OS9, upgraded to Tiger)
Here is my experience:
RAM wasnt too much of an issue, but i had to do a lot of streamlining of Tiger for it to perform well. (e.g. turning off Spolight/Dashboard/Visual Effects etc)After doing this i could run numerous apps at the same time.
iTunes - Worked fine, although the latest verison it ran didn't have access to the iTunes Store (version 5?) This would also be a pain if you have an iPod bought in the last 5 years you need to sync.
Office 2004 ran like a pig on my late 2006 iMac, on the clamshell it was worse. I did look into iWork but was unable to find a copy that ran on the clamshell which didnt cost as much as the laptop itself. Ended up using Bean and saving in .rtf format
Web Browsing isn't great. The 800x600 screen isn't good for web browsing at all, pages are natively larger than the screen so theres alot of zooming out or horizontal scrolling. The latest version of Safari that works is version 4 and this crashed a lot. Tried the latest versions of Opera/Comino to work on Power PC G3 and there were numerous rendering issues. TenFourFox was better but not great. A lot of more complex webpages refused to load on any browser.
Video - i spent a lot of time on this. Numerous web browsers, video optimisation/compression in Opera. Different media players. The MacTubes YouTube client. The mobile Youtube site, YouTube HTML5 etc i couldn't get ANY video to run more than a few frames per second. You can also forget about any form of Flash video.
MobileMe did work fine, but iCloud doesn't.
i was very surprised to find Dropbox was still supported, although i don't know if this is still the case.
The built in networking is adequate for light use. the Ethernet is basically what you still get on some cheaper laptops. The wifi is 802.11a which may not work with your router depending on its setup.
external storage is provided by a FW400 port and a USB1.1 port. USB1.1 is painful, it took hours to backup 6GB to a memory stick.
The speaker is mono and doesn't even sound as good as an iPhone lol
The keyboard and trackpad are surprisingly good, although the trackpad doesn't support right clicking at all.
The screen isn't a patch on the iMac G4 i still have, but is usable.
Its HEAVY, but sturdy.
I can imagine most of the issues mentioned would be exacerbated if the clamshell was running an even older OS. Bearing in mind my Clamshell is the last top-end release i can't recommend it or a lower specc'd model for anything more than a hobby/collectors piece.
If you're just looking for a cheap laptop i'd recommend not paying too much attention to its funky styling and go for something newer. Preferably an intel macbook, or even a Windows laptop or a small tablet.