This may be appropriate for embedded devices that don’t have a network connection, but it would be a lot of work to keep a fully custom distro up-to-date and secure, even with LLM assistance.
Honestly, I’m skeptical that this would be worthwhile unless the new OS itself is the end goal. There’s no shortage of hobby OSes (many now built by some lone dev using AI), but among these projects, most don’t make it past the first point release.
Even thinking your way through the requirements of a small OS is a lot of work. It’s not impossible, but unless you want to get into OS dev, it’s probably not worth the energy when there are already a number of decent options.
With some learning and patience, I think I would have the capability to make an exceptional modded car that has interesting features. But I’m just not interested in spending my time that way!