I recommend Basilisk II, which is a free 68000-series Mac emulator:
http://www.uni-mainz.de/~bauec002/B2Main.html
Low End Mac seems to have a review of it, I just noticed:
http://lowendmac.com/mac2win/02/0501.html
Note that you will have to download the ROMs from your old Mac in order to use it.
For a more classic emulation you might try Vmac or its smaller version http://www.vmac.org/ The next one is pretty long cause my french is worse than my english :) <http://translate.google.com/translate?hl=en&sl=fr&u=http://www.web-emulation.com/article.php%3Fid_article%3D23&prev=/search%3Fq%3D%2522palmos.rom%2B%2522%26start%3D50%26hl%3Den%26lr%3D%26ie%3DUTF-8%26oe%3DUTF-8%26sa%3DN> This one covers a few. http://emulation.net/index.html
See, I'll even cover compact emulation on OSX. ;)
OS7.x is both easier and noticably faster under most emulators than OS8.
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