For a firmware update to be applied to such a machine, the machine has
to be running/booted into OS 9.1/9.2; and support for the USB pen/flash
drive would have to be working inside the computer to import from one.
If the iMac G3 has FireWire ports, you could use a FW cable from another
Mac and use that Mac to import the firmware update into the hard drive of
the other computer; or use disk utilities of the proper type to attempt to
repair the old iMac's hard disk drive before going further. Could be not
only is the logicboard in jeopardy, the drive may also have issues.
[In some cases, a dead or weak clock battery can also be a problem in
the process of firmware updates and PRAM matters.]
The incompatibility of pre-Firmware updated iMac G3s to properly
display video is part of the symptom you get to experience in a sit-
uation where the OSX was installed (or X disc was used to boot the
computer, before firmware was updated in the running OS9 system.)
A different hard drive with the OS9 system for the iMac installed on it
with the Firmware Update on it, and put into the iMac could help in the
process; but you'd have to run the Firmware update after the computer
itself was physically installed in the drive to flash the computer's ROM
and upgrade the bootROM firmware to 4.1.9 or whatever your's needs.
A universally recorded CD-R would work in both a Mac and a PC; Mac
users have been making these for years, usually on a Mac, of course!
Discussions and ideas about the failed or non-applied firmware update:
Firmware problem solver tutorial for slot-loading CRT iMac G3s:
http://www.capecodgraphics.com/imac_firmware.htm
http://www.capecodgraphics.com/pages/macintosh.html
There are a few different approaches to attempting to solve this;
one company has a special process and wanted to sell something;
this following quote is someone's experience from the above link.
"...I thought, what the heck, it's good as dead already... why not try one
more thing? So, I held down the Programmer's button on the side of the
iMac while starting it up.. and bingo! It didn't shut down this time! The
screen was black, but it was up and running to some extent. I hooked up
a PC monitor to the iMac and saw the Open Firmware screen. This was
pretty exciting, until I realized that it was not accepting any input from the
keyboard or mouse. What now? I stuck my OS 9.2 CD into the slot, did
the "3 finger salute" reboot, held down the C key and prayed harder than I
have in a while.... and eureka! The CD booted the iMac successfully! I
was able to do a clean install of the OS to upgrade it from 9.0 to 9.2,
restart the Mac; then upgrade its firmware..." -- may not be repeatable.
Anyway, hopefully you get more feedback on this and a resolution solution!