I need to boot read-only Linux environment on my PegII. Something that runs like a live CD, but can be installed to hard drive. Something small, to keep it fast, would be best, and something specific to the PegII, to cut down on time-consuming hardware detection on each boot, would be ideal. Does anything like this exist?

molk is quiet small & fast.
The kernel-config is included in the archive,
the mol-data file is a simple squash.
Download is here under downloads - for some reason it's
called MOL Live here...

Thanks for the hint. I hadn't thought about using Molk as a distro in itself. Is it safe to power off without halting?

Better at least use "halt -f".
No idea how safe this is though, but probably better than just
power off :)