How do I create a boot media for Red Hat Enterprise Linux 3 if it can not fit on a floppy disk?

You will need to create a boot CD instead of a boot floppy.  You will need to first create an ISO image of the kernel and then burn it to a CD. To create the ISO image, use the mkbootdisk commadn with the --iso option:

# mkbootdisk --iso --device </path/boot.iso> $(uname -r)

Find the ID of your burner by issuing the command be...