I used to host a non-legit server on my 512/256 ADSL line. The server was a P4 2.8Ghz with 1 Gig of RAM.
The biggest limiting factor I found in the number of simultaneous people that I could host was my upstream bandwidth (256Kb/s). I could have 20 people on with little problem if they were all in separate zones (obviously I would boot more zone servers if I was going to allow 20 people on).
It is a different story when multiple people are fighting in the same zone however, as this increases the amount of data the server needs to send to the clients.
Even when I limited the maximum number of players on my server to 10, people would still go LD if there were a few people in a group fighting, or an arena brawl. This was purely down to the amount of data the server was sending exceeding my upstream bandwidth ... CPU and memory were not being stretched at all.
So, if you have a decent PC with 1GB of RAM, your upstream bandwidth will generally determine how many players you should allow on the server.
As you say, you need a zone server per person, if they are all going to be in separate zones, plus a few extra to take account of the fact that when they zone, the zone they are leaving and the one they are entering will be up simultaneously. If there is nobody in a dynamic zone, it will go to sleep after a few seconds and be available to boot up a new zone the next time someone zones.
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