I think your suspicion is unjustified. I've been running Win95 (!!) PC's on internet with no antispyware program and only a freeware virusscan, and I did not have problems.
Moreover, I'm very sure there are new virusscanneers working on '98 (from 89 SE onwards in any case). If you had formatted your PC and installed a good virusscanner you would have been safe I think.
Other points: I have no problems whatsoever with my MS loaded PC's while I do visit "dangerous" websites and download a lot. MS antispyware works perfectly here. MS still supports win '98 as you can still download the updates for that OS from their site. NOt a lot and not the newest security updates and the like, but if they'd continuously update every little issue, we would still be working with Windows 1, right?
. Again, if you want security I'm sure there are antispyware, virusscanners and firewalls working under 98 (SE).