mclovin,
I've checked around on various Linux forums but cannot find any threads which discuss embedded Linux on the current versions of the Chinese Nano clones. For what it's worth, I tried out IPodLinux installer on an erstwhile iPod, and even that didn't work. Unfortunately, I'm not Linux-savvy enough to write my own software for these players.
Moreover, I don't know if the current Nano-clone chipsets will support embedded Linux or not, but would be a cool experiment to find out. After having asked around, though, I don't think it exists yet.
I for one, would
love to see an embedded version of Linux in a Chinese MP3/4 player become a reality, whether it be in the current Nano clones, or in the better Rockchip players and beyond.