I dont see why not, but all this because of the noise of a hard drive? Im amazed because the noisiest thing on my pc is the cd-rom. The only problem I can see is the swap file. If all of the necessary windows are loaded into memory and you start running other applications, it has to lock up because the memory will become too fragmented. 98 hasnt got the best memory management system in the world.
To summarise, I personally think its a lot of work to achieve very little. If noise is that much of a problem, put the damn pc into an acoustic case with a big fan on it.