I was so excited about trying this out I went straight to the machine after work. I booted the original version of the "Universal 9.2.2" disc from the external FW DVD drive. In an ironic twist (because of what I'd just been saying about ATI), when it got to the desktop it seemed to get hung up, but pressing "cmd-opt-esc" popped up a force-quit dialog for "ATI Video Accelerator". After quitting this it quickly finished loading to the desktop successfully!!!!!!!
The Rage128 Pro AGP video card I'm using wasn't getting along with that one extension, but at least that is an entirely separate and isolated issue. I can sort that out later. I'm still getting proper video and full access to resolutions. The max for this card on VGA output is 1280x1024 at millions of colours. (It has 16MB VRAM.)
Next I ran ASR to install to an external SSD on another firewire port. This ran quite smoothly. Rebooted to the SSD with extensions off - WORKED! Cleaned up extensions and control panels (pulled all the ATI ones for now), rebooted - WORKED!!!!!! IT'S ALIVE!!!!!
Not only is this machine very fast, even without the video acceleration and a very old video card, but the multiprocessing is WORKING!!!!!!!! Built-in ethernet works, time server sync works, file sharing enabled (I will test this further later), and internet access WORKS!!! I managed to download Classilla 9.3.3 using Internet Explorer (obviously I could have just copied it from somewhere else, but that wasn't the point).
Now that I have a usable and fast browser on this Xserve I thought it would be most appropriate that I post this message directly from the keyboard of this machine. History, folks! This is so AWESOME!!!!!!!!! I feel honored! This is a huge dream come true for me personally because I originally bought this machine years ago with the hope that some day this would actually work. I never thought that this long after the official dropping of OS 9 support I would be sitting here running this FOR REAL! I don't know what else to say - I'm ecstatic!!!!!!!!!
I will continue testing to see if anything else doesn't work aside from the main ATA controller. This machine is so simple there isn't really much left that could go wrong. We'll continue to work at this and keep you all posted!
P.S. Just before I settle down and go to bed I have one thing to add. I decided to swap out the AGP Rage128 Pro and AGP riser for a Radeon 7000 PCI 32MB and the PCI riser just to see how a later card would work. The Radeon plays nice with all the extensions, seems to have acceleration working, and gives me access to 16:9 ratio resolutions for the LCD I have connected. Now I have a crisp, native 1440x900 and better scolling. When I locate my Cinebench installer I will give it a run at benchmarking the performance.