KT7AGuy Graciously allowed me to borrow anything in his guide.
Theres a lot of useful information here. Some that I wasn't aware of. Generic Win98SE Installation & Setup Guide

Differences of guides.
His guide is mostly a stardard guide for installing 98se and applying patches and some good recommendations.
My guide is geared to custom installation, applying almost no patches, or only applying bare minimum and tweaking.

Difference in Performance.
For Testing I created a virtual machine in VMware 10 running on windows XP.
I limited the Virtual Ram to 64MB and disabled the page file on both machines to get a accurate reading.
Using Process Explorer I measured the memory and CPU usuage while opening my computer.
Both tests were done without any drivers or software installed.

The System with IE spkied to 97% CPU usage opening My Computer, and with 30MB of ram free.
The System with 95 Shell and no IE only spiked to 20% CPU usage and had 40MB of ram free.

I'm aware this isn't the most scientific test, however it's enough to re-enforce the obvious and backs up real world observations and experiences.

Using Autoruns to remove the task scheduler from startup we can see 98se consuming 23 MB ram. All tests were done with Free version of 98lite, Full version allows removing more features.

Conclusion
95 Shell on 98se uses less system resources than IE integrated on 98se.

Preping for Install

You will need your 98se CD
98Se CDrom Bootdisk
Floppy containing the 95 shell files and the 98lite files.

Original Explorer.EXE from 95A do not use a modded or patched explorer for install. After install later you can replace it with a 256 Color tray if you wish.

It's recommended to create 2 partitions. Primary partition for installing windows to.
Second partition the size of about atleast 1 GB.
Create a folder called 95shell on the second partition and copy the 3 files Explorer.exe, shell32.dll and comdlg32.dll there.
Create a folder and unpack the 98lite files there.
I would create a folder and copy any drivers you have.
Especially chipset, USB and Ethernet to facilitate the means of transfering additional files onto the computer after install.

Navigate to the 98lite folder and run 98lite.
Next it will ask you Enter path to install 98lite to. Type 98LITE
It will say transfer complete.
Next it will ask enter the path to CD drive. To copy the win98 Cabs.
After this is done, you will be presented with some screens and just press enter untill it gives you the option for a clean install.
Press 1 to clean install.
Press 1 for sleek
Next it will ask for a path to copy the windows95 explorer files. Since you copied them to 95shell type that path.
Next it will force compatibility and after that finishes it will start a modified 98se setup.
Its going to run a scandisk like normal and the drop you into win setup.
Now you just setup windows like normal excepts chose cutom setup options.
The Free version only lets you uncheck limited things but, id uncheck Internet Explorer, adressbook, and anything else you want.
Now its just going to finish setup like normal.

Reserved...

Unofficial Files

IE 5.5 core
98lite does not completly remove all traces IE5, what it does is leaves 30 or so files or a "IE5 core" of files in the system directory for compatibility. It amounts to about 10 Megabytes.

This is Based on the the IE5.5 SP2 core in unofficial SP3. Basically after confirming if the dll existed on the system or not. I removed extra files that didn't exist on my system, and I deleted the entries from the INI, The regsvr lines were deleted too becasue they don't exist in 98lite and they are not necessary into tricking programs IE is installed. All thats left is a simple reg edit line in the INI trick programs that IE 5.5 Sp2 is installed.

I've tested this to the best of my ability with the few programs I know needed IE5.5 Sp2 and they worked.

MSXML2
Copying just the MSXML2.DLL files to the system directory and running regsvr32 MSXML2.DLL after installing the IE 5.5 Sp2 Core.
Is sufficient enough to install Windows Media Player 9. Wmp 6.4 and any windows media codecs without complaint.

If somthing is not working and you've tried both of these make sure you installed.
VC++6.0, VB 6.0, Microsoft Librarys Update, archive links are posted in the 1st post under files used.

If the program is very old make sure you have VB RUN 1, 2 or 3 copied to the system directory.