I recently had a Celeron 500 that I wanted to install for my flatmate to use as an internet/email machine.
 
All evidence points to the 2.6 kernel being better on old hardware than 2.4, and in general support for hardware increases as you have newer software, so I thought I'd try installing Fedora Core 2 (then test3) on the machine.  I've heard good things about the XFCE desktop environment, so I installed that.
 
The machine started out with 64mb of RAM and took an ice age to install (I think it's about the RPM database needing to be in RAM at install time).  It quickly got upgraded to 192mb RAM, which isn't exactly "new modern specs" but is a machine that was better specced than many machines we had at the recent installfest.
 
I ran a quick, responsive, usable desktop environment on a 286 at 10Mhz.  Linux was basically unusable on this machine. Software took an age to load, you could hardly run two things at the same time, and it was constantly in swap.  The options seemed to be "run Windows 98" (the OS the machine was originally shipped with), or get some sort of Linux distribution that was around the same age.  The Fedora Legacy project provides security updates for Red Hat as far back as 7.3, but I really don't want to run old software.  In the end I found a surprising third option - I installed Windows XP and turned off most of the flash visual bits and pieces, and ended up with a usable machine running modern software.  Not something that I wanted to have to do!
 
There's a long standing belief that Linux can be used to revitalise old hardware.  Short of using a terminal server of some description (which wasn't an option in this case), is this true? 
 
Craig