On my blue and white G3 (upgraded to a G4), it seems to have the option of "network boot" from the "startup disk" in OS 9. Can this computer actually boot off a network?
Yes, it can boot off a NetBoot Server, but not via DHCP, only via BootP protocol: NetBoot 1 compatible, but not NetBoot 2.
So if you use 10.3 Server or later for NetBooting it is not straight forward to accomplish this.