Well the G3 has also significantly slower Ram Speed, and it is imho easily possible to reach limits soon
under all Systems, Linux as well as MorphOS not to speak of Mac OS. Just take for example Emulator stuff,
even Snes9x, while for the avarage Snes Game usable with the G3, it reach its limits when games using transparency
for example, dont even think about games like seiken densetsu 3 which uses most time hires graphics (ok even a G4 reaches
a limit here). Or think about Mame, even UAE (dont even think about emulating an AGA Amiga) runs Better with a G4.
Mplayer also benefits of course from a faster CPU. Otoh MorphOS itself works of course fine also on the G3.
Linux also works, but the G4 is here even more usefull as some apps uses Altivec here.

Mac OS is definetly no fun with a G3, personally i find it also not that fast with a G4. Your choice but I d say go for
a G4 if possible.

Magnetic: I dont know whats your definiton of "surprisingly fast" but Mol definitly is not. I mean it is usable for some
things, but it is indeed noticeable slower than "the real thing" a big showstopper is the missing 2D/3D Hardware Acceleration
in MOL. So as Judas said, graphics is *indeed* very slow on the emulated/virtualized Mac.