Linux From Scratch (LFS) is a project that provides you with step-by-step instructions for building your own custom Linux system, entirely from source code.
It's a very good for whom want to understand Linux in more.
LFS also provide a LFS LiveCD
A LFS LiveCD is a CD that is able to boot your system into a 'live', working operating system, independent of anything on your hard drive. It's a little different than an installation CD, which boots your system into a program that will guide you through the installation of some system onto your hard drive. With a LiveCD, you have an entire system contained on the CD and with that, the freedom to do nearly anything that a system installed on your hard drive can.
The LFS LiveCD is geared specifically toward providing a reliable host system for the purpose of building Linux From Scratch. Therefore, it may not be what you would envision as a "perfect" Linux system. It should, however, provide you with a comfortable enough environment so that you can, in turn, build your own "perfect" system.