I just uploaded a new test image for the 128mb users. It's the latest cm7 and only needs for the the files to be placed on the root of your memory card. It works ok after it settles and i usually have 51mb of ram free with ~9 to 12mb being used by settings so maybe 63mb free at idle with nothing running.
Everythings working except for the wifi and the modem/phone functions.
Here is the LINK
The file "sdboot.zip" contains all of the files that need to be placed on the root of your memory card and the folder "sdcard" has each of the individual files
I haven't done any real tweaks or tested if zram or swap allows it to run on my 64mb universal. I will try to post a video when i get some time of it running on mine with my class10 sd card. Before you say that its not working make sure that your memory card is being mounted when the kernel is being loaded, if not try reinsearting it before android tries to start.