The Radeon will suffice easily, but likely not the RAM.

160MB is very low to run WinXP and Games.
After tons of swapping, it 'should' run, but it won't be alot of fun until then.

By all means, the best OS for such a limited combination is Win98SE with the unofficial SP2.
A Voodoo2 added will give nice native Glide support, the Radeon will need 3rd party OpenGL Renderer for UT (and excel nicely there), not sure how well the Radeon will run Unreal 1 (no 3rd party renderers exist AFAIK).

So in the end, removing WinXP is the best upgrade you can give that System. It will also make your System heaps and bounds more secure, much more free resources, making it more vivid and responsive to work with.