I have an imac G3, bondi blue; i.e one of the first G3 imacs I think. Sarge installs cleanly, but X has to be played with to work. I need to set the default to 16 and comment out the resolutions for X to come up on boot.
I wanted to get sound to work, and changed my sources from stable to testing. I got X using xorg to work, but still could not get sound. So, I tried etch beta 3 install disk. It also installs cleanly, but X hangs (at least under xfree86 I got error messages). I saw a note that says the snd-powerpc can cause hangs so the default boot does not load this module. Not true, it was being loaded so I commented it out in the modules file. Still hangs.
I found a message in the archives that said that the etch install has problems with X, and use sarge with testing distribution.
My question is have you got sound on your early imacs? And do you have another way to get X to work with xfree86 other than 16 bit resolution and commenting out the screen sizes?