I installed apt-get and a ton of apps from the debian repository in my 2GB loop mount. The real deal. You do not need optware -- that just shows you how to get started.
I used debootstrap on ubuntu to build my debian loop image.
By using the built-in kernel, you get built-in eInk support.
Of course, some things are faster on a host PC. It took 12 hours to build X11 from scratch with the full debian build tools version of gcc, in a loop mount my Kindle 3G.