Not sure what to think. I took the card out and put it in my socket 370 system with a 1GHz P3, Via apollo pro 133a chipset and did a fresh install of windows98. Motoracer 2 would not even launch, until I installed directx 8.1, which the card does not support, and the game comes bundled with version 6. Once running the performance was no better in MR2 or NFS3. Same "slow motion" slowdowns I got in the other system. So far this whole voodoo thing is a bust. Not like I remember back in the day. The only thing its good for is the glide wrapper in NFS2.

Probably a V-Sync issue. Back in those days, V-Sync was mostly double-buffered, which means that if you're getting less frames per second than whatever refresh rate your monitor is running at, the framerate locks to exactly half of that.

So, for 60hz, you're getting 30FPS even if you're hitting 58-59FPS. The rubber banding your describe is what happens when V-Sync forces the framerate to constantly change between a 30FPS and 60FPS lock. I too find it very annoying.
If you can live with screen tearing, you should try an old version of PowerStrip to make sure it is disabled.
Otherwise, lower the resolution to 800x600 and perhaps some details as well, NFS3's "Horizon" setting can be quite demanding on slower hardware.

To answer the rest of your questions, the reason you experienced more of this with a faster processor, such as the PIII 800, is because the faster CPU allowed them to achieve a higher framerate more often, but some areas were still too demanding for your system to handle. As such, instead of being locked to 30FPS for most of the time, you made the situation worse by allowing it to "hiccup" even more! This becomes even worse if you're using a CRT monitor with higher refresh rates, such as 85Hz for example, since if you fail to hit 85FPS, that means you're getting locked to 42.5 FPS.
I suggest you avoid installing any version of DirectX higher than 7.0a under Win98SE, as they can make the system unstable. There's loads of threads on the matter around here.

Thanks for the info. I had not played with powerstrip as of yet. I installed it and attempted to create a profile that disabled v-sync. Not sure if the settings were actually being applied or not. The program seemed to behave the opposite as the video phils computer lab put out. I did lower the resolution of MR2 to 800x600 and didnt notice the slowdowns anymore. I played with the horizon in NFS3, didnt seem to make much of a difference, however I had noticed that as well as the view disance have a huge performance impact on my systems.
Thanks for the info about dx8. Im afraid to uninstall it at this point, but next time I install windows, I will only go up to 7, now that I found a standalone installer for that.

Thanks,

Just wanted to put an update here for future use/reference. I was able to resolve my issue by turning off VSync via the 3dfx options in the display settings panel. I had to click on "overclock.exe" to enable overclocking, go into the tab in display settings, then click the option to turn off v-sync. Whatever I was doing in powerstrip was not working.