All versions of gcc >= 3.3.3 do not compile g77, regardless of setting f77 in IUSE. This may be related to 34168.
Okay, here is an update. I manually edited the ebuild file for gcc-3.4.0-r2 so that it states in line 470: gcc_lang="c,c++,f77" The following build created g77 and libg2c, but gcc-config does not switch them over. I know my change is a hard hack, but I haven't been able to figure out why it ignores the f77 setting in the IUSE variable. I believe there is also a bug posted related to gcc-config not switching the g77.
Okay, one more comment: it seems like that the use command in the ebuild script ignores whatever was set to be IUSE. Thomas
Okay this was a problem with my installation. Sorry