Backup VPS Hosting ..

Backup VPS hosting

I'd like feedback on the following.
I've recently come into a pile of older DB servers and my first thoughts were: these would make awesome multiple backup systems.

I'm thinking for some quantity of moneys (say $60/m), a client could rent an entire older machine running ESXi or Xen and host live backups of several VPS accounts. In the event of a failure, the backup could either be replicated to a new primary VPS account, or the domains could be pointed to the backup VM while the primary VPS is inoperable.
Most (all?) of the potential machines are:

4x Xeon 700MHz
8GB RAM
2x 18GB SCSI (RAID1) -- several TB of NFS are available nearby
Some bandwidth (say 0.5MB/s??)

Running either ESX(i) or VMware Server, I've been able to comfortably fit 1/2 dozen to 1 dozen mostly idle VMs. Obviously they'd be a little slow for primarily hosting a full set of live VPS accounts, but I think for backup, testing, or development they'd be a good blend of low cost with capacity.

With regard to the yesteryear CPUs, consider you have (effectively) a full 2.4GHz at your beck and call compared to (who knows how much) of a slice of a more modern CPU with most VPS systems.

So, thoughts? Am I crazy? Sound interesting? Should these be sent off and turned to molten metal+plastic? Obviously there's no technical reason they couldn't be installed w/ some generic Linux distro instead.

I'm not trying to sell/rent these, they're still sitting on pallets awaiting their fate, just soliciting feedback.