Based on koala's suggestion.. I've been looking into d3d wrappers. From what I can tell, this error occurs due to incompatibilities between older directx/d3d (d3d/direct3d is the 3d engine and is a subset under directx) APIs and new gfx card drivers.
So, piggybacking off of linux and wine (windows emulated environment run on linux to support windows games and applications being utilized successfully on linux distributions), someone has ported the directx/d3d part of this emulated environment over to Windows to help provide relief to older games that are plagued by driver incompatibility issues that prevent players from going back to play old games (like Everquest).
here's a few options that I'm currently testing. my goal is to find one that will (hopefully) work with WinEQ2.. I suspect only the developer of WinEQ2 can really make the necessary changes because WinEQ2 uses it's own d3d7/d3d8/d3d9 dll injection and the below directx/d3d dll's either don't work with WinEQ2, or WinEQ2 doesn't work with them or both:
1) DXVK:
https://github.com/doitsujin/dxvk/releases/tag/v1.8.1
2) dgVoodoo2:
http://dege.fw.hu/dgVoodoo2/ (koala's suggested directx/d3d wrapper)
3) WineD3D for Windows:
https://fdossena.com/?p=wined3d/index.frag
I'll keep you updated on which of these (if any) work with WinEQ2.
Alternatively, if anyone knows a way to make the game go full-screen (and actually look fullscreen, no window border, no window application title, etc) then let me know how and I'll toss WinEQ2 to the side.
Cheers!