Does the iPod Work with USB 1.1?

Yes it does, though Apple does not recommend it. They do not give a reason other than the fact that it will be extremely slow. You should remember that the iPod will be active for much longer periods of time when uploading, so additional wear and tear (and possibly heat build up) could be the reason why Apple recommends against this. It is probably best therefore to upload small batches of files at a time to the iPod using a USB 1.1 connection.

Note that FireWire cards and USB 2.0 cards are very cheap and are a better alternative to USB 1.1 over the long term.

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