With the way it is now, you could put X.1 on it, but I would highly recommend X.2 if you have it. it is much more refined then X.1 and should still run on 96mb of ram. It has been a while since I installed X.2 so i might not remember correctly, but it might tell you that you need at least 128mb to install it. I used to have X.3 installed on those machines, but you would need more ram and possibly XPostFacto. I am having a mind block right now so I can't remember for sure if you need XPF to install panther or not.
Even Mac OS 10.1 requires at least 128 Mb of ram and thats pushing it.
I would recommend getting at least 256 Mb of ram, you can get it here. There are two ram slots so you can either get two 128 Mb chips or two 256 Mb chips.
Mac OS 10.1 wasn't really compatible with much as OS X was just becoming popular around that time. I believe Mac OS 10.3 would cause it to run slow so that leaves us Mac OS 10.2 and that would be good.