You can run any Linux distro in terminal mode.
As far as what to use, I don't know. There's GNU/Linux, FreeBSD, NetBSD, OpenBSD, XFree86, Sun Solaris, Mac OS X, HP-UX, et al. All of those have roots in Unix, take your pick.
Booting into Terminal mode is supported by all those. In some OS's, while installing, you can either not install the Windowing system, or you can go ahead and install a Windowing system, like X Windows, or KDE, then once loaded, you can set preferences to reboot to the terminal. Then you can go back and forth as you like. But as far as the OS, you can use any of those. Depends on what you want to do, I guess.
HTH!
Regards,
Rich
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