Actually, it should be fine. MacOS X makes swap files that are physically only 80 MB each (when it needs more, it will make another 80 MB swap file). This may not seem like a lot, but it actually is also compressed (which is why real RAM is definitely preferred over VM, any day).
As for Classic, MacOS X only _tells_ Classic that it has 1 Gig to play around with. This is because MacOS 9 needs to know how much memory it has while it's booting up, and so it tells 9 that it has a heck of a lot. I have Classic on right now, and I still only have a single 80 MB swap file (granted, this is in addition to 320 MB of RAM, but if Classic really had a gig, then even without anything else taking any memory, I'd need 680 MB of VM.)
-Bruce Adcock