The two main problems I ran into were 1) software support at the application layer, and 2) video driver support. There is a herculean effort on the part of package maintainers to build software for distros, and no one has been building 32 bit version of software for years, even if it is possible to build from source. There is only a very limited set of software you can use, even CLI software because so many things are built with 64 bit dependencies. Secondly, old video card drivers are being dropped from the kernel. This means all you have is basic VGA "safe-mode" level support, which isn't even fast enough to play an MPEG2. My final try was to install Debian 5, which was period correct and had support for my hardware, but the live CDs of the the time were not hybrid so the ISO could not boot from USB. I didn't have a burner so I finally gave up.
So I think these types of projects are fun for a proof of concept, but unfortunately are never going to give life to old computers.
My biggest obstacles are that it doesn't have an ethernet port and that it doesn't have BIOS USB support (although it does have a card with two USB ports).
I've managed to run some small Linux distros on it (I'll definitely try this one), but, you're right, I haven't really found anything useful to run on it.
I have P1 90mhz P2 500mhz and typing from P4 just now :P
I think biggest limit will be missing SSE2 PAE POPCNT modern distros need this