I had the same problem.. the machine was dead... that orrible blue screen was facing me with a static expression :). I wasn't able to boot from CD... and from OS9 neither..
BUT i when i thought that maybe the solution was destroy everything in the HD, i had a brilliant idea that helped me to make my os-x live AGAIN.
I opened the Mac then i've disconnected the HD so i forced the mac to boot from CD. Then i, when i started the mac with mac os9.2.1, i choose as startup disc the CD.
Then i shut down and re- connected the HD.. Started again the mac (from cd obvioulsy) i was able to see my HD.. Yahhhoooooo (not the website :) ).. then choose from the contol panel "start up disc" and i selected MY HD (not osx system but classic os9) as start up disk (if you don'y have os9 installed use the cd to install it :) ).
Then i restarted the mac. It started again from the HD!!!!!
Then .... then you have to choose what to do.. if delete osx and reinstall it or try to reinstall it on the old osx.. anyway your mac is living again and soon with osx..... :)
Thanks
Dario