try this, and yes i know you said you have a 7500:
"I have a G3 400 9GBUW with no third party devices whatsoever connected. As with everybody else the Mac freezes when booting from the CD or a HD with OS 9 installed. The offender is the Ethernet drivers that are in the System folder of the OS 9 CD. If you boot from the CD with extensions off then it will boot no problem, install OS 9 and shut down. Now boot from 8.6 and copy all the Open Transport and Ethernet drivers from the 8.6 CD extension folder to the OS 9 system on your hard disk and reboot. Problem solved"
(the above is excerpted from MacFixit)