Why limit the project to Linux? (Score 1)

There are three kinds of operating systems courses: those that teach no practical applications at all (useless), those that teach some useful fragments without providing a broad overall view, and those which force the student to implement an entire, useable operating system by the end of the course.

Clearly Linux is only really relevent to the second type. If you want to learn about OSes properly, as in a structured set of assignments, you're better off doing the whole thing yourself, rather than focusing on one piece you are actually implementing and leaving the rest in the realm of theory.

Doing "something serious and new" with the Linux kernel makes a great MS or Phd thesis, however.