Hmmm Gentoo huh? I've never tried it. Debian is very cool. I love their package system. RH RPMs piss me off more than anything. I find I never use precompiled packages(at least if I can avoid it) performance is always better if you compile your own stuff.
I love all the cool window managers you can get for X. I have a Workstation for that kind of things though, servers are commandline only
Another question: Bandwith?
I know since SOE optimized their packet structure and compressed alot of it the bandwith per client went down. But what did it go down to? How much upstream per client is needed? I know you can play on a 56k easy so it must be under 5k/s.