Thanks, I followed similar instructions. In short:
1. I have created bootable USB from Fedora 8 Live CD image, also copied contents of Packages directory from F8 DVD installation disk onto the same USB stick.
2. I have created a single partition for '/' filesystem, no swap partition (otherwise, if the standard F8 partitioning is used, it leaves but 400 Mb after the installation is finished).
3. All the rest went pretty easy, I followed instructions from Fedora 8 on ASUS eeePC
when in doubt.
After I have installed OpenOffice, it still has 1Gb of free space, and I haven't yet removed unnecessary packages.