I am typing this on an iBook G3 900 that a friend gave me. I upgraded the ram to 640, and swapped out the hd to a 5400 rpm one, and all seems well. It surfs the web just fine, although the page drawing is a tad delayed. General program launching is quick, and I can run a few things at once with no issue. Loading a tab in the background does halt the browser for 2-5 seconds, and if the browser is loading something large, you get a 5+ second delay still (not bandwidth related).
I dunno - makes a great intermediate internet machine. I can even play movies in VLC with no issue. I've half thought about getting rid of my Macbook C2D since I mainly check my email, surf the web (A LOT!), read .pdfs (for school) and uhh, type up papers.
I'd say upgrade the ram, and keep it for a while. Make sure she isn't closing the lid all the time too... that can wear out the wires between the base and the display as I had happen on my iBook G3 700.