If you're serious about a linux distro, one niche that needs filling is a distro for kids. Qimo is the only one I'm aware of and I don't think it would be that difficult to do better. Maybe you could include wine into it and make it easy to play educational windows games. that would be awesome. I have a couple of expert users to give you all of the feedback you want. My 6 year old is already nagging me to replace qimo with xp on her laptop.
As said, it wouldn't be any kind of LFS or anything like that. It's probably be more of a ubuntu/debian remix or something like that. What's wrong with Qimo btw? I ask, because I've been planning on putting it on a 'puter for the kids as they grow a bit older. The oldest one is 3½, so it's soon about time to introduce him to easier kids games etc.