um, according to apple, that g3 does not need any firmware updates to run os x 10.2.8. but if there is an apple supplied scsi card, then the card needs an update
(see here). it was some of the g3 imacs that needed firmware updated to run os x, not the desktops. so you should just be able to boot from the install cd and go from there.
now for xpostfacto, it is a neat little app that helps installing os x on unsupported macs, or macs that have issues with supported versions of os x. if you can't get 10.2 to install as it should, then you should look into xpostfacto. the instructions and info on the web site contains all the info you need, as well as the files that come with the app. the .dmg file you see is called a disk image. double clicking on it should 'open' it, mounting what looks like a removable drive on your desktop. in that 'drive' you will find the files that you need. haven't not done it in a long time, i don't remember exactly, but you should copy the main xpostfacto app to your "mac hard drive>system folder>control panels" folder. then click on the apple icon in the upper left conor, scroll down to control panels and then to xpostfacto. it should present you with a dialoge box with some options. for the first time, you will need to have the os x install cd in the drive. point the app to the cd, and the hard drive you want to install os x on, and click install. it will copy files it needs to the hard drive, and reboot your mac to the install disk. run the installer, telling it to use the same disk you told xpostfacto to use, and do not format the drive. the installer will run, and when its down it will reboot your mac. then it should boot into os x for the first time, and away you go.