The 1400 is limited to 64 megs of RAM and MacOS 8 adds a lot of bloat over 7.6.1 and the minimum requirements are higher, so that offsets any speed gains to be had from using native PPC code. The 603 is no speed demon, either. It was the replacement for the 601 at the bottom of the PPC family. Head over to System 7 today and you'll see many of the members there use 1400's with 7.6.1 and get good use out of them.
Back in the day, when I had a 1400, and then a 2400, the biggest advantage of 8.6 was improved power/battery management. Many of us saw an increase in battery life over 10% when we went from 8.1 or 8.5 to 8.6.
If you are running off AC power, then that won't be too much of a big deal. There really is not much you cannot do in 9.1 or 8.6 that you can't do in 7.6.1, especially if you use SpeedDoubler for the copying improvements. Of course, there will always be the odd program you need 8.x or 9.x for...