The hard part of doing this is to get the right schema and populate the records properly. You can install OpenLDAP easily on a Linux box (or any OS X Mac for that matter) but getting the right information into it is a huge hurdle.
Of course you don't need an XServe to run OS X Server. You could for your network just get a copy of Panther Server - the 10 client version is still serious money at $499 in the US but it will save you a great deal of time and trouble. Install it on the fastest of your home Macs and you should have no problems.
Once you have OS X Server there are even more facilities you can provide than just single sign on and shared Home folders.