OK 3DMonkey, here is what I determined:
You can boot the DV SE with the OS 9 retail disk by holding the "c" key at startup. Apparently, the technique of using the option key (which is normal for OS X) won't recognize the optical drive as a startup device. Apparently my recollection of an inability to boot an OS 9 formatted CD with updated iMac firmware is not correct.
As I wrote earlier, I do not know if the "c" key technique will work if the optical drive has been replaced - mine is original so it works.
Once you install OS X and the drivers for Classic/OS 9 you can use the Option key which enables you to choose the OS 9 System Folder on the HD. Installing OS 9 is painfully slow as it wants to check the entire hard disk for integrity at every step. The iMac originally came with a 30 or 40 GB HD but I upgraded it to the largest one possible 128 GB. The OS 9 programmers probably never thought they would have to integrity-check such an enormous disk.
Here is the root level directory on mine
Last login: Wed Feb 8 20:25:34 on console
Welcome to Darwin!
Johns-iMac:~ john$ cd /
Johns-iMac:/ john$ ls -l
total 1611746
-rwxr-xr-x 1 root john 925696 Feb 8 18:31 AppleShare PDS
drwxrwxr-x 87 root admin 2958 Feb 8 20:14 Applications
drwxr-xr-x 15 root john 510 May 31 2010 Applications (Mac OS 9)
drwxr-xr-x 2 john john 68 Feb 8 19:30 Cleanup At Startup
drwx------ 8 john admin 272 Jul 18 2011 Desktop
lrwxr-xr-x 1 john john 15 Nov 6 2008 Desktop (Mac OS 9) -> /Desktop Folder
drwxrwxrwx 13 root staff 442 May 31 2010 Desktop Folder
-rwxr-xr-x 1 root john 0 Aug 28 2000 DesktopPrinters DB
drwxr-xr-x 12 root john 408 Dec 4 2005 Documents
drwxrwxr-t 42 root admin 1428 Feb 8 19:16 Library
drwxr-xr-x 1 root wheel 512 Feb 8 20:25 Network
drwxr-xr-x 4 root wheel 136 Feb 8 20:23 System
drwxrwxrwx 51 root admin 1734 Feb 8 18:31 System Folder
drwxrwxr-t 8 root admin 272 Feb 8 19:14 Users
-rwxr-xr-x 1 john john 815792128 Feb 8 19:30 VM Storage
drwxrwxrwt 6 root admin 204 Feb 8 20:24 Volumes
drwxrwxrwt 2 root wheel 68 Apr 22 2001 Volumes (Mac OS 9)
drwxr-xr-x 4 root john 136 Apr 3 2005 automount
drwxr-xr-x 40 root wheel 1360 Feb 8 20:12 bin
drwxrwxr-t 2 root admin 68 Apr 3 2005 cores
lrwxr-xr-x 1 john john 13 Nov 6 2008 cores (Mac OS 9) -> private/cores
dr-xr-xr-x 2 root wheel 512 Feb 8 20:23 dev
lrwxr-xr-x 1 root admin 11 Feb 8 18:49 etc -> private/etc
lrwxr-xr-x 1 john john 11 Nov 6 2008 etc (Mac OS 9) -> private/etc
lrwxr-xr-x 1 root admin 9 Feb 8 20:23 mach -> /mach.sym
-r--r--r-- 1 root admin 604360 Feb 8 20:23 mach.sym
-rw-r--r-- 1 root wheel 4352200 Oct 10 2007 mach_kernel
drwxr-xr-x 6 root wheel 204 Feb 8 20:23 private
drwxr-xr-x 63 root wheel 2142 Feb 8 20:13 sbin
lrwxr-xr-x 1 root admin 11 Feb 8 18:52 tmp -> private/tmp
lrwxr-xr-x 1 john john 11 Nov 6 2008 tmp (Mac OS 9) -> private/tmp
drwxr-xr-x 8 root wheel 272 Mar 28 2005 usr
lrwxr-xr-x 1 root admin 11 Feb 8 18:52 var -> private/var
lrwxr-xr-x 1 john john 11 Nov 6 2008 var (Mac OS 9) -> private/var
Johns-iMac:/ john$
The OS 9 System Folder is called just, that whereas the OS X System folder is called "System". Most of the other files are OS X specific.
As you can see there are a lot of other files that relate to OS 9, not just the "System Folder" contents. So it's not as simple as just copying the folder - that alone would not be sufficient to boot OS 9. Furthermore, the HD boot blocks are not determinable from the above, and I think that is what you need to boot OS 9. I believe that can only be accomplished with the retail distribution CD-ROM.
Let me know if this helps, or if there is anything else you want me to do with the DV SE before I put it back into storage.
Here is a screenshot of the machine booted in OS 9:
and another of a circa 1987 program that I originally bought for my SE/30, running on the iMac:
Yes it still works, even if Compuserve isn't around any more 🙂