Embedded Linux PC

I am planning on building a new project in the near future.

One of the features I am attempting to add is a compact flash drive
connected through IDE which would hold linux system processes normally
run in ram.

In effect I would like to have the system shut itself down when logged
out and have a minimal load time when booting back up. With everything
normally loaded into ram at bootup, stored in the flash drive instead,
the only load time would in effect be the bios boot.

I think Linux would be the best way to go about achieving my objectives,
especially since there are many prominent embedded linux projects. What
I want to do is have everything that would be normally loaded up to the
point when you get to the X, KDE, GNome (Whatever) logon screen, stored
solid on a flash drive interfaced through IDE. After you login, it would
  load stuff from the harddrive, to ram. Is there any similar project
out there allready or anything that could help me? Any help is
appreciated, thank you.

The objective of the system would be a demonstration that network
systems in schools and businesses who sit at the logon screen 75% of the
time, could be shutdown and the minimal network, system and logon
processes stored in rom, drastically reducing power consumption.