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I have 512MB on my system and Win98 seems to use all of it. I use photoshop and have had a number of images open at 11MB each and would have expected heavy thrashing if the system was only using 64MB.
Win98 does have problems with systems > 512MB memory. One of the caches wasn't designed to deal with systems with that much memory. There is a patch to fix it, but I don't remember where.
I would expect that putting your swap file into a ram disk would hurt, not help, since the idea of a swap file is to move contents out of memory when not needed so something needed can be brought in.
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