I'll chip in my 2 cents, I suppose.
I use OS 9.2.2 on my clamshell iBook G3. This iBook also has OS X 10.4.11 installed, and it boots/runs fine, but OS 9 is
so much faster on this machine. Keep in mind, OS 9 has its limitations, and is now celebrating it's 10th birthday. But for many tasks, where there's a will there's a way.
For word processing/spreadsheet/drawing purposes I would recommend AppleWorks 6.2.4. It's not free software, but it's fantastic and gets the job done nicely. It even imports/converts Microsoft office files (only up to version 2000, but usually that works and translates properly between platforms just fine.)
If you plan to go wireless on your iMac, bear in mind that only WEP encryption is supported. WPA encryption is not supported under OS 9 at all, as that type of encryption of wireless security came out well after OS 9's support ended.
If you plan to integrate your system with Apple devices such as iPods, iPhones, Apple TV's, and the like, keep this in mind: Only the original iPods with firewire are supported by OS 9. And I'm not even 100% sure your iMac has a firewire port. So, it's likely there is just about 0 compatibility with iPods and OS 9. I've heard some people say that the iPod is recognized as a flash drive if it's placed in Disk mode, but I have not tried that myself, as I only have an iPod Touch, and cannot put it in disk mode... For the most part today's iPods and Apple TV's require OS 10.4.11 or greater to sync with your computer.
One of the biggest limitations of OS 9 is the web browsing capability, and things related to it. I second the recommendation of WaMCom Mozilla. It gets the job done about 80% of the time for me without any major hiccups and rendering issues.
You can of course use it to check multiple email accounts. I use WaMCom Mozilla's mail client to check 4 different email accounts (Gmail, sbcglobal, School IMAP, and MobileMe.) Sometimes attachments just don't show up, and I have to log in to my webmail to get them, but that's my only complaint.
iTunes 2.0.4 is an elegant, rock-solid music player. Keep in mind -- no iTunes store! If you're lucky enough to have an still use one of the original iPods, and you have Firewire, go for it, and sync away! Othewise, I enjoy using iTunes just to play my content, and get the visualizer going for a psychadellic screen saver 🙂 iTunes will import audio CD's and burn them, if you have a CD burner, which you may not if you have the original iMac, but who knows, maybe you can upgrade the drive??
There's fantastic professional level software out there. Some free, most costs money, but cheap now that it's obsolete. I found some graphical editing software that was freeware, called Expression 3, developed my Microsoft, that is Photoshop-esque. Works great.
One of the members above mentioned that they use OS 9 for tape dumps -- funny you should mention that, because that's exactly what I did with my computer! Only, I already have all of the files, and I'm using OS 9 to chop these large wave files into tracks, and import them into iTunes. I use Audacity to chop the files into tracks.
There's tons of free games out there for OS 9, that are loads of fun. My favorites are Marathon Infinity, Maelstrom, Solitaire, MacChess, just to name a few.
Using Goliath 1.0, I can connect to my MobileMe iDisk to copy/move files on my iDisk.
Just about the only feature of my Mobileme account that I can't access in OS 9 to save my life is my web gallery. Viewing a web gallery and adding photos to your web gallery requires a compatible browser, and OS 9 just doesn't have a current enough version of flash and Java to support doing that. I have to boot to Tiger to do anything with my MobileMe web gallery.
But not to say that you can't manage and edit photos like a Pro in OS 9. I use Graphic Converter Classic to view, organize, and edit photos on my computer. It's fantastic software, and I'm thinking about purchasing a license soon.
You can also install AIM 4.7 to chat away with your friends.
That's about most of what I do with it. I'm very satisfied with it, and as long as my iBook is ticking away, I intend to keep using it.