While LFS is simply a set of instructions on how to build a Linux system without a single binary (everything is compiled by yourself!), Gentoo is a real distribution. To be honest, I didn’t give it a try yet, but I’ll definitely keep it on my todo list.
I use a Linux from Scratch hand-build Linux distribution at home, and the project just released a new version. While browsing the comments on Slashdot, I encountered Gentoo Linux, which seems like a nice, less “hard core” alternative to LFS.