If you figure out how to do this over the internet one day, I’ll play it against you with my SE :).
This is a neat one! Anxious to see how the cable goes.
I would venture that running System 3 and copying it allows for something to be set that System 7 does not do (or does something else) to the boot blocks that will not allow System 3 to start up. I’d bet if you copied the System 3 System Folder under System 7, but then started from a System 6...
I have had the program for years. I think I’ve got Bryce 2-4 on my machines, and I also have a version for OS X as well that does run on 10.6, 10.7, etc. so much fun as a kid.