How can I open the Terminal on an iMac G3 (Mac OS 8.5)

Before Mac OS X, Mac OS wasn't even Unix based. Steve Jobs liked things simple and easy, so much so that he forced it on users, instead of giving them the option for advanced or simple. (This still happens with things like iOS, but I won't get into that.)

Mac OS 9 and below DOES NOT have a terminal. Even if it did, it would probably have its own special set of commands, as, like I said before, Classic is not Unix-based like OS X. Classic also didn't have a true filesystem. I believe HFS was introduced some time with OS 7, but even then the OS did a lot of the sorting. Even with a limited filesystem, it was nothing like Unix's filesystem, so there would be none of the files you might expect.

I believe that the only reason OS X has a terminal is because the CLI environment is native to Unix, and there was pressure from consumers to include a terminal. The only reason the terminal is usable is because OS X is a Unix OS and takes much of its CLI tools from its base.