This is on a G4 dual 1ghz with 1.25gigs of ram right now, although I only had 768 until somewhat recently (dec-04). I have over 45gigs on free space currently on the boot drive (I have 4 80gig drives in that system, 2 in a mirror).
I'm on cable modem via ethernet.
I'm on the latest osx panther (currently x.3.8), whch I leave on 24hours a day (not for lw).
If I start lw and hide it, not doing any resume, it's usually fine, I can check things out once in a while and hide it again and it's mostly fine that way.
But I have transfers from modems in eastern europe, of huge files, sometimes the connection gets lost and I get the "need new sources" situation, on which lw is too dumb to even try actively to re-establish a connection, so I have to manually resume them. If I only rarely do a resume and one at a time on few transfers, it has a somewhat good chance of not triggering the vm growth, as long as it goes right back into hiding quickly. If I do a little bit too much, such as resume several files, or resume a big selection of files at once, then the growth is triggered, and it continues creeping up until the crash or I restart it before that happens, usually before it gets too close to 2gigs of vm.