This concept has been used by many universities and corporations, due to the spectacular price-performance ratio. Other type of compute farms have been established using Linux, including one used to generate much of the special effects used in the movie Titanic.
This idea has been taken to something of an extreme in the CHAOS project. CHAOS stands for "CHeap Array of Obsolete Systems", and involves a man who built a parallel-processing array of 386 boxes. While not terribly practical, it certainly illustrates the flexibility and scalability of Linux.