|Using an IDE to CF adaptor, instead of the 2.5" hard drive, should work fine, if the IDE-CF adaptor will fit into the available space, and if the CF device will fit into the adaptor. A regular CF card should, a Microdrive might not, depending on the adaptor.|
I've personally had good success with getting CF cards to work in x86 systems, with IDE-CF adaptors. The systems have all been full-sized cases, though, so I don't know how much room there is to work with for the ThinkNIC, but they really take up very little room, make little heat, and boot very quickly. It's exactly like setting up any IDE hard drive.
Only trouble is the limited life cycle of a CF device prohibts you from putting swap on it. But a Microdrive wouldn't have thtat limitation.