iPods are physically the same. Even the "HP" iPod that Apple sold through HP (for a few years) are the same as the equivalent "Apple" iPod (except for the HP logo on the back). The difference is in how its hard drive is formatted. The procedure that formats the iPod's hard drive is called a Restore, and it is done using iTunes. A Restore erases the iPod, reinstalls its software, and sets it to default ("factory") settings. If you run iTunes on a Windows PC, and do a Restore, it gets formatted for Windows. If you run iTunes on a Mac, and do a Restore, it gets formatted for Mac.
The Restore button is in iTunes, on the iPod's settings screen. NOTE: Macs (running OS X) can read and write the Windows "FAT" format, so you may be able to use a Windows-formatted iPod without doing a Restore. One of my old iPods (not quite as old as 2nd gen) is formatted for Windows, and it works perfectly fine with my Mac. (The reverse is not true; an iPod formatted for Mac needs a Restore to work with a Windows PC.) In any case, iTunes will prompt you to do Restore, if needed, when you connect the iPod to your Mac.
That 2nd gen model will ONLY connect using FireWire. It uses the older FireWire 400 connection, and a regular FireWire cable. The more recent FireWire 800 port can be adapted to FireWire 400.
The likely reason for the higher cost is rarity. Apple did not produce that many 1st and 2nd gen iPods, compared to later models.
Do you have an actual need for it to work with Mac OS 9? I ask because the last version of iTunes that works with Mac OS 9 is VERY old, like version 1 or 2. You would be at a distinct functional disadvantage. For OS X, the most current version of iTunes should work with that iPod (although your Mac may not support current version of iTunes depending on model). But if you can use a more recent version of iTunes and OS X, you should consider a later iPod model with better features and higher storage capacity (and lower cost because they are more common). For example, the 4th gen iPod (first one with "click wheel"); it can connect using either FireWire or USB, with appropriate docking cable. I have one with a 64GB compact flash card (on an adapter) instead of the original 20GB hard drive.