"I recently picked up a cd copy of MacOS X Panther (10.3)..."
Do you mean a burned copy of a Panther installer disk or do you have the (Black with silver "X") retail/universal installer set of 3 CDs, designed to install on a number of compatible Apple products (at the time)? If not 3 CDs, it would be 1 DVD, similar in appearance to the disk in the photo, which the built-in optical drive in your tangerine iMac couldn't read. Attempting to use a gray-color restore disk for another model Mac (or an imaged copy of one) will likely be problematic, since the iMac requires a software build that supports its unique hardware.

As Allan mentioned, the iMac 4.1.9 Firmware Update requires it to be applied while booted from the internal hard disk that's running OS 9.1, 9.2, 9.2.1, or 9.2.2. You'll need to find a safe download source for the Mac OS 9.1 Update, and then run it to update the OS 9.0.4 your iMac is currently running. The Firmware Update may be contained in the Utilities Folder of the retail/universal installer disk, but would not be found on the restore disk for another model Mac.
I found that partitioning the hard drive into at least 2 volumes worked well for a dual-boot setup, with a separate OS installation on each volume. Partitioning requires reformatting, which erases all of the data on the drive, so you'd lose the existing 9.0.4 (OS 9.1) installation.
Is your interest in using this iMac purely for curiosity and not for use with today's internet? If the latter is your intention, you'll be disappointed. The G3 iMacs' 24~26 year-old hardware limitations and the dated software that they can run have rendered them obsolete for that task.
Finally, the convection cooling design of the slot-loading iMacs proved to be inadequate, often leading to heat-related failure of the P-A-V board that provides power to the computer. If you placed a small fan above the vent holes on top of the housing to assist with exhausting the internal heat, you may prolong its service life. When you're not using it, I'd recommend shutting it down and not putting it in sleep mode.