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I have Windows 7 32-bit and it handles 4GB just fine.
No, WIndows 7 32-bit will happily tell you that there's 4GB of RAM installed. It won't crash due to it being there. However, without fiddling with PAE (and even then, 32-bit Windows tends to be limited to 4GB due to licensing), it has 4GB of memory addresses to use. Period. It's using 768MB worth of those addresses to put things in your GPU's memory (assuming you own the 768MB GTX460). It's using more RAM on top of that to talk to other hardware. You only wind up with maybe 3GBish of RAM for the system to use. With a lower end GPU/etc, maybe 3.5GB.
In essence, if you're running 32-bit on a machine with 4GB of actual memory, you likely have the better part of a GB (or more) being completely unused because Windows needs the memory addresses to talk to something else. It says you've got 4GB so that all the people who go to Best Buy or the like and buy a machine with 4GB don't take a look at the system properties and bring back the system because it has less RAM than advertised. Vista 32-bit used to automatically just say 3GB if you had 32-bit, but it became a marketing problem, so now it reports 4GB.
Regardless, your 2GB build would be fine, but in this day n' age it makes very little sense to not just buy 64-bit, unless you have hardware that won't work with it.