Hey there, i had a tbird 1.1ghz and i crushed the core, now i got a Duron 800@900 and i'm still happy. The thing with this upgrade you're talking about, is that you're not focussing the bulk of your cash on what matters. See we need to know what kind of stuff you want to do with your chip... If you want to play games, then take some cash out of the Tbird and put it into a Duron. Get a motherboard like the Asus133 and then overclock the duron for that bit of speed, either that or get a slower Tbird and OC that... Either way sounds good to me.
THe graphics card is good, but if you want really good performance maybe you should go with a DDR card or even some more ram on that baby... Just so you don't reach any bottlenecks, a CPU of 900Mhz is all that anyone needs for most games around today, 900mhz is where they mainly reach their bottlenecks.
More ram would benefit you hugely, get as much as you can afford, the more ram on the less chips the better. So try and get 256mb PC150 chips (kingmax make them) so you'll be guaranteed they will run at CAS2 which is what you want, allows a 33% or so improvement!
Have fun, but be careful not to crush your core whichever way you go.. I really would advise against the P3 because of it's price and lack of speed, but Duron would be the way to go for most people currently, but only because the new and totally improved Palamino is coming out in Autumn or so, should be out by June i would say... Save your money and get one of those, that's what i am doing... Also, you need good HSF, go with the ThermoEngine from TheremoSonic or the FOP38, either way i would put the Delta 7000RPM fan on it.
Have fun
<b><font color=blue>Note to self: Never buy <i>anything</i> without checking with <font color=red>Tom</font color=red> first...