I dunno, I think if you uncheck the additional apps and all the language packs and printer drivers, it might just install with CD 1. I think all of those are on CD 2. Then again, I've never tried it so I dunno...
If you want a Panther experience without any iApps, by all means go with the one CD install. If you want the iApps and the other drivers etc, then use the 2nd c.d.
Yep, when I reinstall I only need the first CD because I don't install the iApps (because I have newer versions on my iLife DVD). I also turn off Asian fonts, Internet Explorer, StuffIt Expander etc.