With your currently installed amount of RAM, you will be better off with Windows 95 then Windows 98.
However, for DirectX versions higher than 8.0 you will need at least Windows 98 (SE). So you are in a catch 22 situation here.
In any case (either win95 or 98), you should use the CacheBooster program (can be found at
www.analogx.com) to minimize the amount of RAM Windows sets aside for it's HDD cache. This will free up lots of MB's, and make it available for your applications like EU2.
Since you report that the game crashes a lot in normal scenario's but not in fantasy, it suggests that it's your (lack of sufficient) memory that is causing the problems. You must take into account that a game like EU2 needs a lot of memory for it's internal game data. It must maintain a lot of info for a large amount of nations. In fantasy games, it runs with only a few nations, and no events, thus requiring a lot less RAM.
To check the above assumption, start the system monitor, and let it monitor the amount of page-in/page-outs (it can be found under the memory manager class). If it surpasses someting like 50-60 per second on your particular hardware, then you are asking for trouble.
Also, your current Voodoo 2 driver may not be (completely) compatible with your current DirectX version. After all, it is out of production for several years now. EU2 puts a lot of stress on the driver (through DirectX), and that may cause the driver to crash, and with it EU2 itself.
In case you have a SoundBlaster PCI based soundcard, check in it's driver configuration how much system RAM is reserved for soundfont wavetable files. By default, this is something like 10-12 MB, while the default loaded soundfont file is typically something like 2-4 MB in size. The remainder is permanently claimed and in use by the driver, and thus not available for applications.
Jan Peter