I can't comment on 'BlitzMax-friendly' specifically, but Flameduck has previously mentioned that Debian-based distros tend to snuggle up to BlitzMax a bit more than others, and this one has Debian ties...
www.damnsmalllinux.org
Damn Small is small enough and smart enough to do the following things:
Boot from a business card CD as a live linux distribution (LiveCD)
Boot from a USB pen drive
Boot from within a host operating system (that's right, it can run *inside* Windows)
Run very nicely from an IDE Compact Flash drive via a method we call "frugal install"
Transform into a Debian OS with a traditional hard drive install
Run light enough to power a 486DX with 16MB of Ram
Run fully in RAM with as little as 128MB (you will be amazed at how fast your computer can be!)
Modularly grow -- DSL is highly extendable without the need to customize
As far as the size of the stick required, DSL is made to fit into 50MB so something at least that big, I guess. :o)
If you want to check it out, they have an 'embedded' version on the website that runs in Windows.
