I am thinking of buying a nettop/netbook with a dual core atom cpu or equivalent AMD.
With that there is usually anything from a Intel 2000HD "graphics" to higher, perhaps an ION.

How good are these systems in running mid to late 90's and mid 2000's games under Windows XP?

Some of the older games required a 1.5 or so Ghz single core Pentium 4 CPU. Would these modern low powered CPUs be enough?

Depends on the genre, I suppose. Baldur's Gate falls into that vintage and I was playing that - and a ton of other games from that era - on an AMD K6-300.

I am sorry for the late reply. Thank you for your comment.

it should do fine
it does depend on the games a bit
but most games of that era shouldnt be that difficult

you would be able to get away with morrowind
anacrhonox
both balders gates
icewind dale
maybe even the original half life
unreal
hexen
quake 1 and 2

forget about doom 3 though

well i finally have two such systems, one is a tablet with windows 8.1 and the other is a slim pc with xp and they are remarkable powerful' for example the tablet can easily handle oblivion and i am talking about a 200 euro tablet.
i havent tested the slim pc yet, which has only a dual core cpu but better gpu.

they both should do just fine then
sooner or later you will find an upper limit though a game that just wont run on the hardware
but even then you got loads and loads to play

oh yeah, besides I got the slim pc solely for old windows games (I played Ultimate Race Pro by Mps after 15 years!), and the tablet for browsing and two games which both work fantastic on it.