From what I can gather, the only real difference between a Celeron and a Pentium is the amount of Cache? If this is the case, surely a Pentium III 700/256/100 would be outperformed by a Celeron 1000/256/100? Do you think the same would apply if the Celeron only had 128KB cache?
The cache is part of it, but Intel may have the highest FSB slower than the the top FSB of the Pentium counterparts. They may also recycle an older Pentium core with less features, but that depends. Same thing with AMD's Athlon and Sempron (and in the past, Duron).
these days with a 256k cache, SSE3 and EM64T instructions, the Celeron D is a much better choice than previous Celerons. Even tho the cache is a quarter the size of the current Prescott P4's, the performance is on average more like 75-80% of the speed of a similarly clocked P4. Basically, the last generation of Celeron vs P4 chips had a much wider performance gap than the current generation. Also, I think Intel is also taking a page from AMD's book and reducing the size of the pipeline to get more performance per clock cycle. Although I'm not sure if any advances have made it into current generation Celerons or Pentiums. I have no idea if this is even of any help!