Your specs are more than enough. I'm running 800 x 600 presently on a measly Celeron 500 with 192 MB and a Rage Mobility, and provided I remember to turn off DirectDraw acceleration, I can pretty much handle any fight. I can even run 1024x768 if I want to, but this is sluggish.
The simple answer is: just try it out. If it doesn't work, you'll notice that it doesn't work, at which point you can just reconfigure. The auto-save should be enough to recover from mishaps should you get a crash due to graphics overload (which is rare). I cannot stress two things enough, though:
- At the first sign of display troubles, disable 3D effects. Trust me, you're not missing much with this turned off, and many people have reported visual glitches or noticeable slowdowns.
- Even before any trouble, turn off DirectDraw acceleration. (Yes: *off*. The designers had some bad candy before they sat down to write the graphics engine). You do this with Start -] Run... -] "dxdiag" -] Display -] Disable. This will nearly always speed up the game, especially in fights involving lots of effects or huge creatures (like dragons). The only drawback is that you have to remember to turn it back on for pretty much anything else.