Linux and Free Software :: The power of uclibc & current technologies
I stumbled upon something that's quite close to what I have in mind.
It's a uclibc based distribution, includes full Xorg 7.2, a full compiling environment, and a lot of other apps.
It uses modern technologies, like 2.6 kernel and squashfs.
The main point: it's 40mb.
Check the list of apps:
http://detaolb.sourceforge.net/
Kernel 2.4 and isofs aren't modern?
Well, cloop hasn't gotten too updated 
No, I don't consider them modern in the meaning of "new", or "up-to-date".
That doesn't mean they aren't usable, though.
original here.