How do I burn a bootable CD from a .toast file?
Yup, just use Toast Titanium and burn the .toast file to a CD. That will create a bootable CD that will be usable on your G3.

Burn is a free application for burning CDs/DVDs. I don't know if it supports .toast files, but give it a try if you don't have Toast, since it may save you from buying it. I couldn't find online documentation for it, so let me know how it works.