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On older G3s, you cannot install OS X on a hard drive or partition larger than 8GB. So you need to partition the hard drive, with the first partition having a size of 7.9GB. OS X must be installed on this partition.
You don't have enough RAM installed to run OS X.
Unless the install CDs are retail versions or versions specifically for your iMac, you are wasting your time.
Cheers, Tom
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