Yes, if you do a custum install and unselect all the check marked packages, the system will still run. By default redhat installs the packages that they think are necessary for normal operation.
I did a barebones install of RH 7.1 Alpha on a DEC Alphastation I sold, just to give the guy something to look at when he got it. The install put almost 300 meg of stuff on the system with all packages unchecked, but the system was still able to do networking and sendmail.
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