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Yep - my thinking with Damn
Yep - my thinking with Damn Small Linux was to have the whole thing executing out of RAM as much as possible, not so much to switch off hardware. The particular application I had in mind was simple text editing, the sort of thing you can do with a 50c microcontroller (but instead need to run a 20W laptop).
OLPC is a bit special in that they're co-designing the hardware and software to be capable of such drastic power-saving measures - and things like removing timers becomes important, as you mention. I'd obviously love for that sort of measure to be taken with standard PC setups - I can't even get Windows to spin down the hard drive, for heaven's sake. My day job involves a lot of embedded work where we take similarly aggressive measures on ARM parts - even going so far as powering off the entire device when it's idle for long enough and being able to quickly restore the UI from the bootloader (while the actual OS startup takes up to 20 seconds).
I saw PowerTop and love the idea, but I'm pretty sure that with the CPU power consumption on the M1210 isn't a big issue compared with the rest of the machine. The big power savings have been coming from disabling peripherals. The screen on this thing doesn't even turn off when the lid is closed - good work, Microsoft/nVIDIA/Dell!