Could you provide some decent documentation/walkthrough on slimming down a
Debian based router/firewall concistent with your recomendations?
If you are really looking for an embedded firewall solution, I strongly recommend that you do not go out and build your own.
I have worked with Coyote Linux before (http://www.coyotelinux.com/), and found it ... irritating as all heck, but it was an embedded system.
I have also used a few others, most of which have died at some point in the last decade or so.
One still very much alive -and popular- project is LEAF. (Linux Embedded Appliance Firewall) The developer community is very active and their user support is one of the best I've ever seen, especially tollerant of newbies from the Windows world.
http://leaf.sourceforge.net/

