Best way to emulate Windows 98 with a decent CPU and good graphics with at least 512-1024 MBs of RAM?

[pangoomis]

WineD3D does not work on 98SE/ME, believe me I've tried
Haven't tried Mesa3D but I don't have high hopes for it either, considering that OpenGL on 98SE/ME is limited to version 2.0 using NVIDIA drivers and 1.5 using ATI drivers further complicating things. Just because you can drop a DLL of the same name to emulate new things, doesn't mean it will work on 98SE/ME.

Depending on games you want to play and luck, SwiftShader might be the only thing working on 98SE/ME for you, at least its demo apps worked on 98SE/ME from what I've tested.