Linux.com featured a great case study on the use of LTSP with recycled hardware in a Brazilian doctor's office. While the case study is not terribly detailed, it does provide some useful "what worked and what didn't" for seriously aging hardware (including the LTSP server).
For anyone unfamiliar with the effort, LTSP stands for Linux Terminal Server Project, and is the technology behind Edubuntu's thin client computing. It's also an add-on available for many distributions, bringing Windows Terminal Server-style functionality to Linux servers.
Most notable is that, while the author tried multiple distributions and desktop environments, he settled on Ubuntu and Gnome to achieve acceptable performance from a Pentium III "server." This is encouraging, since Edubuntu is basically Ubuntu with LTSP and Gnome. The case study looks at a small office (6 user computers), but this model could certainly be applied to a classroom.
Also of interest was the author's ability to get proprietary, legacy Windows applications to run under Wine, so that all of the users in the office could access the patient database. This has certainly been a sticking point for rollout of Edubuntu in schools since many schools (mine included) have significant investments in Windows or Mac educational software.