What is OEL VM? Can you be more specific, such as naming the correct product name and version?
Why do you think that reducing the color depth of your screen is going to make any difference? You can do the math:
1280 x 800 x 24 / 8 / 1024 / 1024 = 2.9 MB. Also, this is VRAM and not using your RAM.
Not running the X-Server or using a window manager like twm can reduce the memory footprint, but anything else is not worth bothering in a standard or default installation. You can boot into text mode adding the number 3 to the kernel boot parameter or modify /etc/inittab and set the init level from 5 (graphic) to 3 (text). However, RAM isn't expensive anymore, why not simply adding more RAM?
Appreciate your quick response. I have created a virtual box image using Oracle Enterprise Linux v5. The idea is to use this image for a workshop that I am building. The problem is in countries outside of US, most folks have a standard configuration of a 4GB laptop running a 64 bit OS such as windows 7 or some flavor of 64 bit Linux. My goal is to create an image which can run comfortably under 3GB of RAM so that my workshop can be successfully deployed. I can turn off X-server however there are a couple of situations during the workshop when Windows is required to run couple of utilities. And there in lies the problem.