I'm running the JReceiver server on Linux on exactly the same spec hardware as you're proposing - 166MHz and 48MB RAM.

The web-based user interface for the server isn't exactly snappy, but it's perfectly usable. I've had absolutely no problems driving my single Rio with this spec.

The server is also acting as my local fileserver, and a NAT gateway/router/firewall for my local network out over my cable modem connection.

I've not experienecd any dropouts under normal usage.