I've downloaded and installed System 7.5.3 on a Classic II, but it seems really pokey and runs out of memory when trying to enable File Sharing (4MB installed, 8MB with VM turned on). I'm looking to repurpose this little B&W gem into a little retro gaming system, with Mac games of that era (Prince of Persia, SimCity, and the like).
The Classic II I have is running quite nicely (I don't have much to compare it to, but it seems OK to use) with System 7.1. I've 'hacked' some components of 7.5 into it, such as the control strip and window shade. Just copy the extensions you need over to the 7.1 system folder, they'll run.
The system running it's bare essentials occupies around 1,3MB of memory, with some more bells and whistles (networking, control strip and such) I get it up to 1,6MB. It's great to run Clarisworks 1.0, DirecTex and some games!
If you don't mind going a little further back, System 6.0.8L absolutely flies on the Classic II. Mine boots in about 15 seconds flat under System 6. Not to mention that System 6 takes up minimal RAM, usually under 700k.