Hello Acratus, and welcome.
It's not really clear to me whether the problems comes when kernel boots or before anything is ever loaded from CD.
In the first case, i think Acrux gave you a complete list of solutions to face a wide range of scenarios... be sure to load the kernel with
as far as the cd/dvd is attached as slave to the ide chanenl on iMacs G3... then append your options (afaik there is no need of extra options on iMac G3, i will test this tonight or tomorrow).
If it doesn't read anything from CD, there are chances that your OpenFirmware doesn't recognize the CD as bootable, or your hard disk is not partitioned correctly and it hangs there. The solution should be the same as described here:http://www.cruxppc.org/FAQ#q10
Be sure to correctly write the string (yes it looks weird) in openfirmware. I sometimes experienced similar random problems due to cdrom drive pre-failure.
Please report what happens.