Thanks for everyone's feedback. I finally DID IT !
using latest RPMs from Redhat (Arjan's) helped a lot though - i suspect . basically i upgraded all the components as recommended in a few articles abt upgrading to 2.6.
everything seems to be working fine ... just some minor hiccups (now solved) after the new kernel installation :-
1) RPM was hanging (temporary fix - 'export LD_ASSUME_KERNEL=2.2.5')
2) No sound (maestro3 module was not loaded - modified /etc/modprobe.conf)
now i have WinXP, RH9 (2.4.20-8) and (2.6.1) bootable under LILO.
any one contemplating on upgrading and have queries .... i am happy to share my experience