I might just chime in on this thread, seeing as I have a P166 Dell laptop, with 32MB ram. It runs gentoo with fluxbox quite happily. Forget anything like KDE though, I tried starting it once using Knoppix, and it was literally over half an hour of solid swapping! I installed gentoo using distcc (I have a celeron 1GHz networked to it), and it only took me a week or so to get it up and going from stage two ;-) Mind you, some of those things, like X, you can't compile with distcc. You have _no_idea_ how long that takes ;-)
Gentoo does run marginally faster than RH 7.2 I used to have on there, I think. But I'm running different stuff (when I installed RH I hadn't heard of fluxbox, only blackbox which it didn't have, so I installed sawfish). So I'm not comparing apples with apples anyway. As far as local apps go, I run lynx or opera for a browser, mutt or slypheed for mail, and if you want something like a word processor, try abiword. Incidentally, if anyone can point me to a latex ebuild for gentoo, or a way to search for one, I'd appreciate it ;-) They don't seem to have it. Most of the time I use it as a terminal though, at home. 1/2 a dozen ssh sessions to my grunty machine open, and often an X session. It works great as an X terminal. If you don't have a display manager installed on your other machine, you don't need one (although Nick's method is probably better / cleaner / more correct). I just start X with an xterm (and no window manager) and ssh into my grunty machine ($ ssh -X -l gareth 192.168.1.5), then manually start KDE ($ startkde). KDE 3.1 runs _beautifully_ like this, I can't notice any difference to sitting in front of the actual machine. Sure impresses the heck out of people if they don't notice the network connection ;-) Anyway, good luck with the 133MHz laptop, and I strongly echo Hadley's recommendation of fluxbox as a light window manager. It rocks :-) Cheers, Gareth