It looks like the listed minimum for RHEL 6 was 1gb[1]. I don't think 128 was officially supported even then, so if you're happy with how it works now, you may still be happy with 7.
Probably. You'll have to hack the install procedure to enable swapping before it's being run though.
If you're serious about trying this, the fastest path is to install CentOS in a VM on a suitable machine that isn't going to spend a day in the installer swapping like crazy, and copy the image to a physical drive which you eventually stuff into the ancient low memory box.
1) http://www.slac.stanford.edu/comp/unix/linux/install_RHEL6.h...