I have successfully booted and run Tinycore Linux 4.0 from a pen drive. One thing to watch out for with the latest Tiny Core kernels is that they now support frequency scaling for the CPU - i.e. they can adjust the clock rate based on load. A side effect of this is /proc/cpuinfo shows the system as having a 532MHz processor.
You can find out what's going on by installing the cpufreq-utils and then running cpufreq-info:
tc@box:~$ /usr/local/bin/cpufreq-info cpufrequtils 008: cpufreq-info (C) Dominik Brodowski 2004-2009 Report errors and bugs to cpufreq@vger.kernel.org, please. analyzing CPU 0: driver: longhaul CPUs which run at the same hardware frequency: 0 CPUs which need to have their frequency coordinated by software: 0 maximum transition latency: 200 us. hardware limits: 532 MHz - 798 MHz available frequency steps: 532 MHz, 598 MHz, 665 MHz, 731 MHz, 798 MHz available cpufreq governors: userspace, powersave, conservative, ondemand, performance current policy: frequency should be within 532 MHz and 798 MHz. The governor "ondemand" may decide which speed to use within this range. current CPU frequency is 532 MHz. cpufreq stats: 532 MHz:97.29%, 598 MHz:0.00%, 665 MHz:0.21%, 731 MHz:0.00%, 798 MHz:2.50% (6)