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OS 10.2 will need about 1.9 GB to install, so even if your drive is 2 GB large, the actual formatted space will be less. So you will definitely need to get a bigger internal HD if you want to use any OS X release.
As to the issue with the 8 GB partition to run OS X, this is a firmware issue with the WallStreet lineup as well as the first revision of the iMac, and since the firmware in these models is OldWorld (i.e. non-upgradable) no OS X release will change this limitation. Sorry. But at least this situation makes you do a good practice of partitioning your internal HD.
__________________ Current Machine
Athlon XP 2500+ @ 2200 MHz OC (3200+) in Sonata case (what noise?  )
Dual booting Gentoo Linux, Windows XP  , and FreeBSD
Asus A7N8X Deluxe nForce2/2 x Western Digital 120 GB/512 MB DDR 3200/Radeon 9800/Logitech Wireless Keyboard/Mouse (mx700, woo!)
Dead
PowerBook G3 WallStreet 300 MHz
Mac OS 9.2.1/Mac OS 10.2.4/320 MB RAM/Broken Right Hinge/20 GB IBM TravelStar HD |