I've been testing some different hardware configurations for my Win9x system and I stumbled across a way to get better mouse movement without needing to use any external programs like PS2Rate with drivers shipped with Win98 SE. This option also allows for mouse acceleration to be disabled.

WARNING: Follow at your own risk, these steps may not work with all mice.

Before starting, make sure you have the Windows 98 install CD available.

1. Go to Control Panel -> System -> Device Manager and expand the Mouse drop down
2. Go to the properties of your PS/2 mouse and go to Driver -> Update Driver
3. Click next and choose the option to display the list of drivers
4. Select 'show all hardware' and scroll down and select 'Logitech'
5. Scroll down to the bottom and select 'Other Logitech Mouse PS/2'
6. Click through the rest of the wizard, following the directions. The mouse won't be available to finish the wizard, so tab through it and restart

Once restarted, the mouse should be working. If not, your mouse is unfortunately not compatible with this guide and will need to be restored to the default drivers.
Mouse adjustments/disabling mouse acceleration

1. Go to Start Menu -> Run and type 'regedit' to get the the Registry Editor
2. Go to HKEY_LOCAL_MACHINE\Logitech\MouseWare\CurrentVersion\WheelMouseIM\0000
3. Edit the 'Acceleration' entry from 'Low' to 'Off'
4. Change 'NumberOfButtons' to '3'
5. Close Registry and restart

There should be much smoother mouse movement (especially noticeable >60Hz) and no mouse acceleration in Windows. There doesn't seem to be mouse acceleration in DOS under Windows either.

Extra: These drivers seem to be based off of the Logitech MouseWare 8.x drivers, maybe those work as well?