The laptop looks ok, but a bit expensive. I got my Sony Vaio PIII 500, 64MB RAM 14" Screen, 6.4GB for like $1700. Added 128MB for $100 from Buy.com few weeks ago, so whole thing cost me like $1800, and that was 3 month ago, so prices should go down a bit. My HDD is a bit small, but it's not that bad since it is not going to be my main PC.
My suggestion is look at sites like hot deal forums at this site, or other hot deal forums for special deals. I got my laptop with $200 rebate from buying at a specific site, and $100 rebate from Sony. Just don't pay retail!!
You are right that you don't need a high power CPU, but memory is definately a factor. But just one thing, if you want to upgrade your laptop to Win2k by yourself, make sure you got all the drivers. I have been wanting to do the same thing with my sony, but I am not sure if I can get all the drivers for it. Hopefully Toshiba release all the drivers to everyone.