You could try my CM7 kang: http://kan.gd/1h7f
CM7 was written & tested for the European 512mb ram version of the phone, that doesn't run out of ram so badly. My kanged version has a few tweaks to the kernel to make it run faster.
You could try enabling swap space by formatting your sd card in clockworkmod, might as well create a ext partition too. 512mb ext & 128mb swap should be ok. That'll let your phone use the sd card as virtual memory. You could also try compcache.
There are a few other settings to make it a bit faster too, like overclocking. Disable surface dithering for faster graphics. Look in CyanogenMod settings.
You could also try GSF, it's based on a zte 2.3.5 with few customisations, it might use a bit less ram than CM7.