Yes, there is a possibillity to run Linux on a 8MHz Computer with 1MB of RAM. You just have to Install a SCSI-HDD via ASCI to SCSI and install it.
You can download the special distribution @ ftp://ftp.lip6.fr/pub/atari/GnuKit/
But a better Network connection you'll get with using MiNT. Therefor you need at least 2MB's of RAM. There are many possibilities for an ethernet between an average ST and even a Server of 800MHz or something like that. The best solution is the SCSI-to-Ethernet converter, which works well under MiNT but also with Linux 68k.
By the way can anyone tell me where to get a 8MB Ram extension for my Mega ST cheaply?