Intel Graphics Driver crash

I seem to have a problem with the game client causing my Intel graphics driver to crash.
I'm running XP SP3, 3GB of RAM, dual-core 2.33GHz CPU, on an HP machine (an old-ish ~2007 office workhorse, dc7800 "small form factor"), with an Intel GMA 3100 integrated graphics chip (latest driver is from Jan 2010, from the Intel Q35 Express chipset family).
Quite often the game will cause the Intel Graphic driver (igxprd32.dll) to crash. I then basically have to reboot. There's also an "odd" version of javaw.exe taking up 50% of my CPU, even after I kill the client, which seems to cause my machine to freeze while shutting down (meaning I have to forcefully de-power the machine). Slightly rarer occasions cause a full-blown blue-screen of death.
Other noticable graphics issues include "missing" body parts during character creation (switching between combinations of body types and colours seems to make them visible/invisible ), and "flickering "lit" floor panels in the Arcade (which flicker more when I move around), misapplied textures (but not always), and some other flickering glitches.
The crash seems to mostly occur when loading in the Arcade area (loading will hit 100%, then the client crashes after bringing up the very "top" of the GUI but before any actual 3D), but it has also happened when loading in other areas (including entering gates), and on some occasions when just walking around. However, at other times the exact same areas will load in fine (there's no real consistency to the glitches/crashes except for the flicking in the Arcade).
Looking at the technical specs I think my machine should be able to handle them (even though it's an integrated graphics chip, it's quite a "good" one on paper, the game specs aren't that high, DXdiag says it has ~384 MB of memory). However, I am aware of issues when Java and Intel graphics "get together" (I've played a couple of other java-based MMOs which had graphical problems specific to Intel graphics)
I've done various things like use older drivers, drivers from the HP site, drivers from the Intel site, graphics are set to "low", with compatibility mode on (whatever that does?), and the crashes still occur. Java is fully up-to-date on 6.23.

"lack of hardware accelerated vertex shaders."
Yea, I was wondering about that. I thought Geforce 5 series didn't support that either (being a much older product) so I kinda ignored it... but after checking wikipedia for the spec of those, it seems they do, as does the Radeon (though their naming scheme is confusing as f, so I'm not too sure).
Guess it's time for an graphics upgrade for me (which is a whole other barrel of fish)
... managed to get an older machine (which has a Geforce FX 5200 in it) up and running (no dual core, 512 mb ram). Apart from a couple of hiccups during a particularly crowded fight, it runs fine.

Good to hear it runs well on the minimum video card specs.
A graphics update as you suggested would definitely give you a major improvement game-wise. You are a bit more limited to low-profile video cards, but with some searching around you can definitely find some that are well priced.
We've had another person with a GMA 3100 post similar problems though that thread went unresolved as he never posted back again. I think the issue lies around the Wikipedia quoted "lack of hardware accelerated vertex shaders." Compatibility mode seems to disable translucent object effects.
I sometimes play on my laptop with a GMA X3100 and it has the same floor panel issue. I've had similar lighting issues with the light trails in other games like Tribes: Vengance and have long since assumed its a hardware incompatibility. Also, the laptop has 4GB or RAM and a 2.00GHz Core 2 Duo that gets pegged at 50% when running the game. In my case the game has difficulty rendering smoothly (at least 30 fps) at all times with minimum quality and a resolution of 1024x768. The unfortunate reality is that the Intel GMA series just isn't built with 3D gaming in the forefront of it's feature set.