Before stepping up to my now old powerbook G4 400 I used a 5300 cs for all my daily work, college, office work, etc. I found that 8.6 worked quite well, HFS+ helped me out with the original 500 MB hard drive if I recall correctly. Never had any problems with 9.04 either. Office 98 and Appleworks 5 and 6 worked well as did Netscape 4.79 and (cough, cough) Internet Explorer 4. If I can remember I also used Outlook and Outlook express without much difficulty. I have heard that with a wi-fi pc card and drivers from ioxperts you can have airport work with OS 9. But I never tried it. Brings back fond memories of that little laptop. Some may say that they suck and tend to be the worst laptops Apple ever made. However, I never had a problem with mine.
Hope this helps.