I'm working on a project that I'm hoping will result in a "game" that will be placed in an arcade type setting. I only have basic Linux experience with Red Hat, but I'm hoping to find a version that will best work on a standard PC setup for this application and I'd also like to be able to modify the OS to basically be ready for power-down at any moment - since that's the standard way of turning off arcade games

So, is this the version of Linux that I should be looking at? I'm very unexperienced here, so any input is appreciated.

LFS is all about scratch building Linux - every single package has to be hand compiled. As a very new user, this may well turn into a much longer project than you want. I'd suggest Slack or Vector with ReiserFS.

ok thanks! By Slack do you mean Slackware?