It turned out to be the very old PSU for some reason wasn't supplying enough current on the -12V supply. Since installing the new PSU about 4 years ago I've never seen this problem occur again... 
Strange that this caused crashes. I once forgot to wire in the -12V rail entirely and the worst I got was half-wave rectified audio (not pleasant) and failure of the serial port to operate (again, signal rectification). As soon as I realised my mistake and connected it, all was well.
I don't know how your machine is wired up, but I used both the original rear port connector as well as the motherboard floppy power header as places to inject the 0, 5 and 12V rails. The -12V rail is only attached via the rear connector, but then again, current requirement is minimal. I did find that even after supplying the HD, floppy and CD directly from the PSU, the combined draw of the 1200 motherboard, BlizzardPPC and BVisionPPC was a bit more than I was comfortable feeding in through the original power connector, which is why I decided to inject additional power via the motherboard floppy power header.