It depends on what you take as "normal" use. I've used this model of iMac before on a couple of different occasions, and it seems responsive and up-to-par in the larger non-video apps. It would be fine with Quark, AppleWorks, TextEdit, Safari/FireFox, and maybe some Photoshop'ing. I would greatly advise you to get that 512 RAM upgrade, it would make a world of difference.
You can get OSX fairly cheap off of eBay.(If it were me, I would go for Panther instead of Tiger)
Here's a link I found within a couple seconds on eBay: http://cgi.ebay.com/ws/eBayISAPI.dll...199614297&rd=1