Why don't you hang on for a month until Mandrake 10 is solidified. If you run it with a lot of eye candy turned off, it'll run as fast or faster than your '98 install.
A lot of people seem to forget that KDE and Gnome are set up out of the box with so much more candy than even the most well-dressed XP machine. I have run stock Debian on a p1-166 with 48mb of (the old slow EDO) RAM with Gnome and it ran only slightly less quickly than when it had '95 on it, and almost the same as when I had '98 on it. it still made '98 look plain and drab. And, remember, this was stock, so it was compiled for i386. If it was recompiled for i586, it would have made '98 look slow as well as plain-jane.
BTW, my wife's puter is running XP and its a P-II 350. It runs better than before with '98SE (although I always had at least 128mb in it). It runs well with the "Classic" interface. Looks like 2000 and has all the goodies (except all those services that are useless for a home user - disabled, thank you).
That machine ran well with Debian Woody and Sid. From my experiences since, I'd sugggest that you decide on a distro by what you think is going to be more comfortable for you to use.If you don't wanna pay fer anything, then I'd suggest you try Mandrake, Debian, Fedora Core, Slackware, or one of the live-cds that have a good HD installer (I'm partial to Mepis). If you wanna learn, do Gentoo.
Where you are running a P-II, you can look for one that's already optimized for i586 or i686 and experience more speed.