Looks like it can probebly read lower discs , but not always write to them:
The Zip 750MB drive features backward compatibility that allows you to read and write to 750MB and 250MB Zip disks, and read only from 100MB Zip disks. Performance when writing to a 250MB Zip disk is significantly reduced, because of the higher capacity of the Zip 750MB drive. To maximize performance of your Zip 750MB drive, you should use 750MB Zip disks.
But this also very likely depends on the brand and model of the drive. What brand and model do you have?
(this is from an Iomega Zip® 750MB USB/FireWire drive)