Can't boot OS X

I apologize that this is a complex post, but I want to give you all the steps I've already tried. I'm not yet ready to throw this machine away.

Hardware:

Power Mac G4 (QuickSilver 2002), 2 x 1GHz

History:

Computer was running Mac OS X without issues. One day, the computer would not fully boot. It starts to boot with the Apple graphic and spinning pinwheel, but after some time, displays the circle with a line through it.

*Tests Performed*:

• Attempted to boot to TechTool CD ... same problem.
• Attempted to boot to Network Boot Disk (Mac OS X) ... same problem.
• Attempted to boot to FireWire Disk (Mac OS X) ... same problem.
• Replaced all memory with known-good memory ... same problem.
• Disconnected all IDE/ATA cables and attempted to boot to network disk ... same.
• Found a similar machine's Apple Hardware Test CD. Booted to that and ran all tests ... PASSED WITHOUT ERROR.
• Booted from Mac OS 9 Installer WITHOUT PROBLEM
• Installed Mac OS 9 to hard drive WITHOUT PROBLEM
• Still booted from CD, opened System Preferences and selected Startup Disk ... computer froze and mouse would not move.
• Used option key to select boot drive. Selected OS 9 ... machine froze at "Welcome to Mac OS"
• Zapped PRAM ... same problems.
• Reset PMU ... same problems.
• Tested internal battery. It shows 2.7 volts (lower than spec), so replaced it with fresh battery (measuring 3.4 volts). Computer WILL NOT POWER ON!
• Removed battery ... computer returns to previous problem state.
• Installed original battery ... computer returns to previous problem state.

I'm eager to hear what other people think about these symptoms. Please provide ideas on how to troubleshoot/fix this problem.