I would try an Ubuntu PPC build as a starting point an build up what you need from that.
Using the alternate Ubuntu CD's a command line install is straightforward and gives you a basic starting point. You can add whatever you like, depending on what resources you end up having available. Play around with different configurations and check them out using the command line tool
free, if you're so inclined.
The base Ubuntu (command line only) uses only 39MB memory (peak), 19MB buffer adjusted. After installing packages to make it all windowy (X, openbox, firefox, etc), it ended up at 446MB peak, 120MB buffer adjusted.
I am not sure how the base PPC build will compare, but I guess they will be close. You could take a look at Crunchbang for some inspiration on creating a lightweight Ubuntu based installation.