I have BSD self-contained on a Zip disk, and it works well enough.  You
don't have a lot of space to fool around with; for example, you can have
all the general files and X, or you can have the general files and the
compiler binaries, but certainly not both.  As far as basic operation
goes, however, there don't seem to be any problems.  I had to use the SBC
kernels, but I don't recall if it's been determined that that is a
Zip-specific requirement or a CPU/other hardware-dependent issue. 

Good luck

Jeffrey Ohlmann