I would check all cables and connectors. Where does the mouse plug in? Does it plug into the keyboard? I would suspect the mouse itself or the cabling between the mouse and the computer, or the connector.
Local computer stores often will have an old style mouse you can try to see if that is the problem.
By the way, how do you know that the keyboard still works, aside from resetting PRAM?
A 10-yr old 7500 is no big deal -- I still have a PowerMac 7100 (with G3 266 MHz processor upgrade card) that I bought in 1994 and it still works fine. It is outfitted with an external CD burner, external HD, and external Jaz drive, all on a SCSI chain. It runs OS 9.04.