As promised, I return with my 'findings':
1. Bluetooth connectivity DOES work in OS9 but...
2. You need to find a pre-revC1 DBT-120. Having said this (and done so), I haven't gone the extra mile and actually tried to flash the revC1 module with Apple's Firmware Update 1.2. I'm just regurgitating what I've read on other forums about the revC1 being 'un-updateable'.
Having gotten ahold of a revB4, it still took me a day and a half to figure out how to flash the thing. Long story short: the Firmware Update is *Panther Only*--specifically 10.3.7 as Apple no longer supplies ComboUpdate-10.3.6, the stated requirement for the updater. [Chalk one up for the utility of keeping an all-purpose 15gig partition on my 120gig HD!] Trying to flash the DBT-120 with the firmware update from Tiger failed repeatedly. Luckily, I already had an old 10.3.4 OS disk and just had to run the comboupdater on that install.
So, to get OS9 Bluetooth, get a revB2-B4 DBT-120 module (talk about a niche market on eBay!), install a minimal version of Panther (10.3.7 to be exact), and run the Bluetooth Firmware 1.2 updater. In my case, I'd already paired my mouse/keyboard before doing this, but I don't think that matters. In fact, I inadvertantly ran the updater from my wireless m/k. In OSX it duly disconnected upon updating the firmware, and reconnected upon completion.
Sure enough, in OS9 the BT-wireless devices work! Two things are missing, however: you can't use the Option key to choose between startup volumes, IOW you'll need to get used to using the Startup CP's again. No biggie for me. The other thing missing in OS9 that is great in OSX is trackball scrolling. Also no biggie for me. Just being able to use wireless tech in OS9 is good enough, and when you think about it, is an expected consequence of the updater 'fooling' the OS into seeing standard USB HID's. Back in 2004 I don't believe Apple made a mouse with trackball, so Apple had no reason to accommodate that in OS9 for its own gear. On the other hand, there is one benefit you get with the firmware update that you don't get with the revC1 module (mentioned many times in this forum): Keyboard wake from Sleep.
So, I'm out a total of $50 for two DBT-120's but with OS9 Bluetooth enabled I'm a happy camper! Hope this helps any others seeking OS9 or Wake-From-Sleep functionality.--Tom