OK... so apparently we are seeing things in 2022 that we have never seen before...
1st: The famous 1.25 Dual that only ran at 917Mhz.
http://macos9lives.com/smforum/index.php/topic,6443.msg48360.html#msg483602nd: Now the 1.25 that hates OS9
Since Mactron and I have literally tested many dozens of MDD daughterboards over the years, and even throwing Xserve CPUs in MDDs without issue, I don't think it is a "rev" of the CPU that is causing the issue of "Not Booting or OS 9", I think more likely, our precious MDD CPU daughter boards are getting old, just like me, and are starting to have "health" issues after 20 years. We have already proven, that old macs can die a total death or start to produce some strange anomalies and decide to "work, but not as expected"
It makes sense that heat kills; micro-cracks and transistor failure on a microscopic level will continue to plague our CPU daughterboards. Just because we cannot recognize or pinpoint the CPU feature that "OS 9 needs" as opposed to what "OS X Needs" does not mean it doesn't exist and perhaps that "feature" is going bad. That fact that OS 9 has booted and then froze supports the argument that we have intermittent electronic failure and NOT a missing feature from this particular CPU revision, otherwise, it would be more consistent and just never attempt it.
At this point, I usually stick to a rule with Old PPC hardware. If the part displays intermittent issues, and I cannot fix it on a component level, then it gets trashed immediately. In the old days, I made a terrible habit of re-shelving parts and forgetting to label them "maybe bad" and hoping God would fix it, or it would fix itself, only to re-use it months later and get bit in the ass all over again. Now, those parts get a dirt nap, or a label if they are rare, but it is done immediately. If a labeled part displays the same or a different issue at a later time, there is no third strike, it gets tossed.
In other words, I personally would not use this CPU in OS X, even if it appeared to work correctly. If I was on a serious budget, then I would run the Mac MDD diagnostics in "extended" mode at least 2 times (even if that took several hours) before I would rely of this computer for anything of importance. I would not want to be in a position of loosing work/time on something that is not reliable. You did the right thing and bought a different CPU. I think we all got analysis paralysis on this one so I think in the future, we better go with our gut... swap out memory, then duaghterboard, then logic board, all while testing with the diagnostic CD.