Looking for Upgrade Advice for Gaming

Your current thought is good. I wouldn't go with a less video card, I'd stick with the 9700.
And no, the 4x AGP will not hurt video performance at all. There is pratically no difference between 4x and 8x. (MABY, a difference of 3 frames).

I am looking for an upgrade at the mo sa well, and am limited to a budget similar to yours, except that i have south african rands making stuff more expensive. Anyway, im looking for specs slightly different to yours as graphic cards are really expensive and seeing as they are im gonna go for a faster cpu.
These are the specs im looking at (no brand names as im not far in my upgrade quest) :
nforce2 mboard w/agp8X, ddr400, integrated mx440(or not if i get a gcard)
amdxp Barton cpu 2600XP
ddr333 256mb
optional: ati 9500 128mb, case 350w black

AGP 8x doesnt seem to be having an impact at the mo in the benchmarks ive seen but at higher resolutions its been showing its head. I'd get a mboard w/it to be on the safe side as it may have a 5-10fps impact when playing the likes of doom3/quake4/halflife2. Definitely get an OClocking friendly mboard as it will save u when you PC gets out of date (which it will in short time). A harddrive is the lowest of priority to me as they have been very slow in improvement over the past few years aside from size.

hope i helped
RAD

Thanks for your guys input.

Zuse: I would love to get a better motherboad, but that would mean I have to get a cheaper Vid Card. Based on what sargeduck said, I think i'll stick with what I had posted and put a new motherboard on the wish list.

Thanks again guys

Ben

There is no 2600 Barton.

"Every Day is the Right Day." -Pink Floyd