Linux requires more resources, but if it's a small board you want to roll Linux checkout the Raspberry Pi!

http://www.raspberrypi.org/

You theoretically can on the 8-bit ATMegas, so I don't see why not. Using it in practice, though, is another matter.

http://www.bit-tech.net/news/hardware/2012/03/30/linux-atmel...

At 96kByte of RAM...? No.