I'm not sure what you mean.
This
https://copy.com/m8tzMVk4wZnGweighs in at under 350mb. This is only so "huge" because azenis is in the trash and Dark Glass is crazy heavy. Even the wallpaper is heavy.
The trick with Puppy, as should it be whenever building whatever is taking it in baby steps and testing everything as you go. You need to get the dependencies to build and then strip it. The idea is to have something that can run on anything, at least for me. You can go other directions though.
As far as your weight, you need to test this weight. Nautilus for example will give a higher estimate than dolphin. It is the same bytes of course, but when it comes to GB the numbers will differ.
Something to keep in mind when dealing with the 4GB Barrier
As far as "opening up and building onto"
Uhhhhh
Idk
Puppy comes in many flavors. There is a common thread of Joe and Rox but the base can vary. Since you are most comfortable with Ubuntu I would probably start there.
I really like the 5.2.60 Puppy Precise