Really? My recollection is that Gmail was substantially different in the extent to which it was an in-browser Javascript app built around server-side data requests. That's in contrast to something where applications were a series of mostly-static pages.
My recollection was that Outlook's Web Access was the first. IIRC, it used what would become XMLHttpRequest when it was still internal to Microsoft, so it's the first of what we might consider to be modern web application. GP's 1997 seems right on, though, since that was the first release.
Microsoft invented AJAX specifically for Outlook Web Access so yes that is in fact the first "modern" web application.
As I recall there was a fight about getting it in and the creators called it XMLHttpRequest because XML was the hotness at the time and that got it past the project managers and PHBs.
