The idea
Use only as much space as necessary. This includes no portage nor gcc install on target system (ipaq). The idea is tu fully cross-compile the system for ipaq on a i686 host into a subdir and create a jffs2 image which will be uploaded to the ipaq.
The steps
emerge crossdev
crossdev --target arm-unknown-linux-gnu
export ARCH="arm"
export ACCEPT_KEYWORDS="arm"
export CHOST="arm-unknown-linux-gnu"
export CBUILD="i686-pc-linux-gnu"
export CFLAGS="-O2 -pipe"
export CXXFLAGS=${CFLAGS}
export ROOT="/tmp/ipaq"
export USE="-*"
export FEATURES="-distcc"
export CONFIG_PROTECT="-* ${ROOT}/etc"
### Bootstrap ###
USE="bootstrap build" emerge sysvinit
USE="bootstrap build" emerge baselayout
emerge sys-kernel/linux-headers
USE="bootstrap build" emerge sys-libs/glibc