Oh, I like this!
But it should have some internal memory, 2 - 4G as well as sufficient RAM to run the programs, say 512M - 1G. Android is probably not the best choice for this. After all, the whole purpose of Android is to get you to make money for Google through the Play Store. If you're not spending money, you are of no use to Goggle. Linux isn't a good choice either (I know Android is Linux) since there are too many different versions.
One of the BSDs would be a perfect choice. All that is needed is a program loader, a simple file manager and screen interface. Probably NetBSD, since it runs on almost everything. The BSD licence is friendlier to commercial/proprietary interests as well.
There is real potential for a very nice, useful piece of hardware there. A shame that it probably never happen.
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