I am going to be building a Pylons-based web application. For this purpose, I'd like to build a minimal Linux platform, upon which I would then install the necessary packages such as Python and Pylons, and other necessary dependencies. The other reason to keep it minimal is because this machine will be virtual, probably over KVM, and will eventually be replicated in some cloud environment.
What would you use to do this? I am thinking of using Fedora 10's AOS iso, but would love to understand all my options.
For this purpose, I'd like to build a minimal Linux platform...

So Why not try to use ArchLinux www.archlinux.org?
Also you can use virtualenv with Pylons in it.
Miminal Linux For a Pylons Web App?