Funny, I'm thinking of switching back to 98se on my 1Ghz Celeron lappy too. Speed it up a bit and will be better for gaming. The games I'm using are all older ones that orginally ran under 95/98 anyway, so no problems there.
I was reading about a stripped down version of 98 a guy made. I'd link you up, but I have to find the magazine I was reading it in. Basically it was 98 stripped down to the most basic you possibly could, and you installed extras from there.
Small file too. Again, I can't remember the exact size, but his next project was stripping it down even further so it would all boot from a 1.44 floppy disk...