Assuming you're not going to be rebuilding the whole lot manually each time, you're also going to have to go through the rather cute experience of building (and maintaining) your own automation tooling around maintaining your minimal embedded Linux.
If I were developing an embedded project, I don't know about you, but I would suggest focusing on the project itself might be a nice idea, not wasting time on things like a custom OS.
Custom OS is fine if you've got a large team working along side you. But if its a one-man-band (or small team) then all the cuteness will soon evaporate.
If you think all Linux distros are too bloated, why not go BSD instead ?
For example, OpenBSD is famous for a minimal default install, and guess what, they maintain ready-to-go builds for Pine 64/64+, Raspberry Pi 3 and Raspberry Pi 4.[1]