Yeah, it will certainly help, but honestly you're gonna want to think about upgrading to a G4 in the coming months... a 700 G3 is capable of running OS X, and 512 MB would certainly help it, but you're going to find slowdowns in a lot of places you wouldn't expect. Of course, maybe it's just cuz I'm jaded
Anyway, G3s really were designed to run OS 9. They work better in OS 9 than G4s due (at least with the same amounts of RAM) because OS 9 is much better optimized for the backside cache, which is present but not nearly as efficient on the G4. However, X is optimized for the Velocity Engine, and there is a HUGE performance increase.
As long as you're above 500 MHz, I suppose anything will do. Can anyone explain to me why my iceBook/500 with 128 MB of RAM runs OS X so dog-slow? It's truly pathetic. My Blueberry iBook/300 with 192 MB of RAM runs OS X much better, sadly enough. (Which, by the way, is an UNSUPPORTED machine, as the minimum OS X requirement is a 300 MHz processer). However, the two G4 machines in my house, a Sawtooth G4/400 and an LCD iMac G4/800, kick ANY G3 out of the water... even G3s with much higher clock speeds (the G4/400 is MUCH faster than a 700-MHz G3 iMac; more proof of the Megahertz Myth!)