Yes, you must remove the internal modem from the Performa. End of story.
CommSlot and CommSlot II modem cards actually deactivate the modem serial port. As such the port is plugged at the factory when a modem is in the computer. When you remove the modem, you should then remove the plug. The port will be immediatly available to you once the card is removed. This does not necessarily mean that you won't have modem software problems or conflicts as you setup your new modem.
Ironically, CommSlot (II) Ethernet cards do not deactivate the modem serial port. Which is a good thing and was far thinking on the part of Apple at the time they designed the CommSlot. It makes performas great dialup routers since they can have a high quality external modem and the ethernet port to distribute data to a network.