bitcoind requires at least 1GB of RAM and usually more.
Thanks Cypherdoc. I am trying to make sense of this: is this because bitcoind is loading the unspent outputs into RAM for faster checking? My intuition is still telling me that for a custom implementation I just need enough RAM to comfortably pool the unconfirmed transactions.
The memory usage is primarily storing the UXTO in memory. The memory pool is also kept in memory but it is much smaller than the UXTO. You could probably reduce the memory footprint with some "intelligent" caching system scoring each output based on the likelihood it will be in the next transaction (i.e. the unspent output from the coinbase of block2 is probably not going to be used in the next tx so dropping it from the in memory cache won't be an issue).
Remember reads from disk are very slow (compared to memory) and you can't validate a transaction until you lookup the outputs. If none of the unspent outputs are in memory well you have now made 100% of tx validations requiring a round trip to the disk. Right now throughput of the network is slow enough that you won't fall behind however for bootstraping a new node it is going to be painfully slow.