MacOS.app requires no Mac OS ROM file because it is not a New World ROM based system, such as the iMac or Power Macintosh G3 (Blue and White). When installing Mac OS from within MacOS.app, the installer places a version of the Mac OS on the drive for MacOS.app and not one for the Power Macintosh G3 (Blue and White). This System folder contains no Mac OS ROM file and will not start up a Power Macintosh G3 (Blue and White) if you select that partition as your startup disk. The installed system will start up Mac OS.app, however.
The workaround is to start up the Power Macintosh G3 Blue and White from the Mac OS 8 or Mac OS 9 CD and install from it.