Yeah, sorry, I meant to respond to this but got sidetracked.
The one machine I have that can handle this runs Ubuntu 11.04, which uses 3.x kernels. Rolling my own 2.6.x kernel for it means keeping that machine on 2.6 until these V4L loopback projects are upgraded to support 3.x kernels, which for my purposes means "indefinitely."
If it came down to that, I'd probably run a small VM with 2.6 on it just for this purpose and hope that it can handle the load. If it couldn't, I'd probably try experimenting with Xen virtualization and seeing if I could run two Xen nodes on it.