Funny you should mention this, last night I just installed WinXP on a dual P2-450 with 1.5GB RAM. But no, I can say from experience it's still slow no matter how much RAM I put in it. 😀 It's execution performance is still that of a P2-450. As others have said, it just won't hit any speed bumps if the RAM gets heavily occupied.
There might occasionally be load spikes where more RAM comes into effect, but for the most part an excessive amount of RAM won't make a noticeable difference.
Historically it's been common for many people to not have enough RAM for Windows to operate smoothly with their applications. It's most common with non-technical users with store bought PCs, which often skimp on RAM as a way of making them less expensive. For them, more RAM is an effective performance upgrade.
I remember getting a 2nd hand Dell P4 (in beautiful condition) which was using over 300MB at boot with the user's basic applications, yet only had 256MB installed from Dell. The guy probably didn't understand why it was so painfully slow and thus decided to get rid of it. I looked up the service tag and the whole configuration was factory original. The original buyer had ordered the machine with a Prescott Hyperthreaded CPU upgrade, but still the default 256MB RAM.