One of my family members runs Slitaz on an old Compaq Celeron. (equal to a P-II I think) with 256 MB RAM. I'm looking at WattsOS R4 to replace that - hopefully. Time will tell.
Hi 60 kWh - wattOS wont likely be as fast as Slitaz, but there are obviously lots of other upside. the liveCD will be slow, but 256MB should work fine. Once you get it installed to the hard drive, it should be smooth sailing. I have installed to a PII-366 with 256MB of RAM. It took a bit, but once installed it ran nice and took much less that 256MB and was perfectly functional for web browsing, etc...and was much quicker.