A PPC-specific distro on the 603e seems like the best option. It'll run much faster than the 68k, and will be able to use fairly recent software too.
There was some kernel patches that made older lunix kernels run on systems without an MMU, but I doubt you'll get it to run with any recent software.
Edit: Seems the project is still going on, and are actually working with Coldfires:
Linkety-link!
