Another hard drive swap question - re: 8GB partition for OSX in iMac 266

Question

I have a Tangerine iMac 266 that I am setting up for a neighbor's son. The original 6GB hard drive was toast, so I swapped in an old 10GB drive that had previously been removed from an iMacDV 400. The 10GB "new" drive had OSX 10.3.1 and OS 9.1 on a single partition. I am aware that these early iMacs need OSX in a first partition of less than 8GB, so I expected that I would need to partition the "new" drive. However, while I was loading an install CD after powering up, the iMac booted fine into OSX, despite it NOT being located in a first partition of less than 8GB (and has continued operating well - booting multiple times in OS X and 9, surfing the net, etc...the only weirdness is a refusal of Word X to run).
I thought this was impossible, and in researching this I found that the Apple support site says that, for this computer, "Mac OS X must be installed on a volume that is contained entirely within the first 8 GB of its ATA hard disk." see http://docs.info.apple.com/article.html?artnum=106235
My Questions:
Is the 8GB limit only related to iINSTALLING OSX on these machines (and not RUNNING OSX)?
Will the machine run into problems later if a portion of the OS (i.e., during an update) gets installed outside of the first 8GB of the disk?
One of the log files says that the driver is out of date for the RageproC, and Classic applications that require more than 4MB of VRAM say that I don't have enough VRAM to run, yet the iMac has 6MB of VRAM (2 on MB and 4 in slot as listing by the system profiler) - do I need to (or should I) reinstall the system software (I already tried loading the latest ATI drivers, but it did't help)?
P.S. - to add more data points on the subject of RAM upgrades in these iMacs, my iMac 266 would not accept a 256MB PC-100 SO-DIMM that worked fine in an iBook and in the upper slot of a Rev. A iMac 233. Well, it accepted it, but only recognized the first 128MB.

Answer 1

I believe Duane is correct. Even with Mac OS 9, you can run fine as long as all OS components used during startup are within the first 8GB of space. However, (even with Mac OS 9) as soon as something used during startup ends up beyond that limit, you will get open firmware or a gray screen at startup. The Mac OS X does not allow the installation target to exceed the limit as a preventative measure, not because it won't work at all.
The best "non-technical" explanation I have heard as to why, is this... The IDE hardware (and its driver) can only "see" the first 8GB of space during the initial start up process before the OS is loaded. Once start up completes, control is handed to the OS, which can see the entire drive. Therefore, apps have no problem running from beyond the limit. Only components needed before the hand-off is constrained to the 8GB limit.
FYI - On my iMac and 120GB drive, 7.78 GB (as shown in a Finder window) is the precise point where the Mac OS X Installer allows the volume to be the install target. "Precise" to with a few hundred MB's.