Yes, a GF4 Ti4200 will work great with an Athlon TBird 1.2 ghz. A TBird 1.2 ghz is not all that slow, I have one running now in another computer oc'ed to 1.35 ghz and it rocks.
Yes, you will see an amazing difference in performance and picture quality. Like night and day difference from GF2 MX. Heck, you'd see a big difference just upgrading to a GF2 GTS.
I would get the 128 meg card for future games. The little extra cost is worth it.
On your system, upgrading to a GF4 Ti4200 is definitly worth the money. DEFINITLY