Yes to both.

I run OSol on a home, non production server.  It performs many server tasks: 
file sharing via CIFS, iSCSI storage (including various boot images for 
laptops), time server, VirtualBox server, backup server, media server for the 
Tivo and, most importantly, a desktop server via Sun Ray terminals which 
provide hotdesking: a persistent desktop available from any workstation that 
you never need to log out of.

Is OSol best for a server or desktop?  Yes.
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