I successfully converted the ZeroShell 2.0-RC2 2GB Disk image to a 1GB (actually 1048MB) image for installation on a 1GB PQI IDE DiskOnModule, 060729DA. I also wrote detailed instructions for resizing the 2GB image if you have a smaller target device. I uploaded the 1GB image and instructions here:
http://jupiter.bensoft.com/~dbennett/ZeroShell/
–Dave