A P133 is more than enough for a router. I have an old 486DX/50 that's still more than fast enough. As for what to run on it, it depends on what you want it to do and how much you know/understand about networking. If all you're looking for is a router (not a file-sharing server), I'd suggest running Freesco. It's pretty easy to setup, runs off a hard drive or ONE floppy disk, and you don't need a monitor for the machine after you finish setting it up.
As for the hardware side, you are correct. The cable modem goes to one of the network cards, and the hub goes to the other.