Out of curiosity I've installed Win98SE in PDM and besides the well-reported horrible installation time (2 hours, no shit) stuff seem to work about as much as intended. Now, since I already do have Win2k as the main VM, it's not a great concern for me, but would Win9x VMs ever get mouse synchronization support? Apparently, Parallels Control Center lists the video display as 'unknown' despite having installed the video driver from Parallels Tools. I guess that's the side-effect of the reason why the mouse sync isn't supported in the current version under Win9x.
Mouse sync tool for guest Win9x is in our roadmap for future versions but it has lower priority than mouse sync tool for Linux.