It will run Photoshop 3-4 layers at 800 X 600 pixel aspect if you are patient and careful.
Clarisworks or Word run just fine.
ITunes stutters only when visuals are on But a small screen isn't to bad.
VM is useless. Use it if you REALLY want to slow the machine. Use no more than 1 MB.
The hard part is that the OS takes a lot more overhead in RAM. But if you cut out all unnecessary extensions and no desktop picture you might get it down to near OS 8.6 overhead.
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