Sorry for my late reply. Thank you for replying. I doubted if my post would be answered at all, since I'm no network expert and was afraid I was getting misunderstood. This is a long post. Hope you don't mind reading.
Again, thanks for taking the time to observe my problem

In order to prevent any confusing about what kind of router we are talking about: consumer routers and computer routers. The first one is "a normal in any computer shop to buy router for normal people"
In my first post I summed up a bit, leaving much history out. In following I will tell you more about history behind each router system and why I chose a solution. Maybe more details will help you to understand my frustration and what I might have missed.

Like most of us, advanced computer users, I have started somewhere really low. My very first internet connection was through a USB modem (speedtouch). After a while my dad took over the internet bill and demanded a way to share the connection, which became a consumer modem/router (e-tech). This router really annoyed me for 2 years I think, but I never considered replacing it because I thought it's my own computer knowledge shortcomings. But after a while I had to restart it twice a day and replaced it with a second-hand Hercules modem/router. This one died after 2 months. I replaced it again with the same brand new one and this one lasted 5 months.
So far I felt like that my problem had to be "quality" of purchased modem/routers. I also thought about how "normal" people use their router and come up with that my usage exceeds far beyond the situation the routers are build for. Normal households use internet for like an hour, maybe download a bit, a total of up-most 3 hours a day. That should explain why their router is not dying after 5 months.
Based on this outcome I decided to go pro. Professional routers as used in small business or mid-size corps like Cisco 800-series. But those were quite expensive 1000+ euro and a used one would be 600+ euro.
In my search I came across FreeSCO, used it for a while but it was plain expensive in power usage as a normal PC is needed. My knowledge wasn't sufficient enough to make a floppy-based router run headless on a low-powered computer. Or for that matter copy it to run off a CF card.
Then I discovered Linux and after 6 months my knowledge was sufficient to follow how-to's for setting up a specialized system in general. With this knowledge I have been able to setup a NAS/Webserver/XBMC (xbox) media centers etc..
In the time I was learning/using Linux I bought some cheap thin clients (neoware) and used one as router. Later I added a PCI ADSL modem and this was my first DIY modem/router which uses as little as 15Watt. This was 2 years ago.
It lasted for 3 weeks by my own dumb mistake and then I came across SmoothWall CF mod. I bought a new CF card and started over again. I was happy, my parents were happy and we all noticed the response and download was faster. No more restarts, no more crashes, no more connection problems. This second setup lasted 5 months.
I did this again and for the third time it died.
Finally, I tracked down the problem as I thought it was, quality. But I was wrong again. After number of years, consumer routers dying, a SmoothWall router died on my as-well, and this was something else than a consumer router. It's just a x86 computer, nothing embedded like consumer routers, but it died in the same amount of time as consumer routers.
But I kept going with a conclusion that Thin client might have been low powered and having not enough quality for my network as well.
Here we arrive at recent history. I bought a Raq3i (brand new! 10 years stayed in the box), installed RaqCop, installed the same ADSL PCI modem I used in my Smoothwall and I'm suppose to be done with years of problems? wrong again.
I have literally eliminated every possible cause I can come up with:
- heat, solved by using multiple fans and my 19" rack is also active cooled (6 fans on top) AND an air-conditioning for the summer
- static electricity, solved by various tools and working as an absolute paranoid to prevent any static electricity damaging components.
- never buy second-hand unless you have no choice
- knowledge, gain as much as possible to make the right choice
- replace when broken instead of (trying) saving it
These method of eliminating problems have cost me quite a bit but all my systems are now stable and work for me instead of me working for them

I think you can see how odd I felt. After all these years and lot's of gained knowledge my problem was still not solved? From a non-technical user I became an advanced computer user on my own (no education in IT) and I'm back to the day my first router died?
That's it for history. Now you know that, let's go on with answering your questions

Well, it's not normal for every situation to have them fail that often. Are you doing a lot of proxy caching?
I don't think so. Consumer routers I owned didn't have such thing unless I'm really wrong and some do have such thing but hidden in web-gui?
As for RaqCop, yes I used proxy but if this is the problem, how come consumer routers have died as-well? how come my Smoothwall has died too? Smoothwall with CF mod I can say it I didn't use proxy on that.
As far as your Smoothwall on flash card, was it installed like a normal hard drive install? I'm not sure if Smoothwall has the same method as IPCop does in flash installs designed to run the disk intensive tasks in a mounted ramdisk so you use ram, not the drive constantly. Flash drives have a lot less read/write cycles they can handle. Industrial grade CF cards can tolerate quite a bit more.
sort of. You can install Smoothwall on a CF card and then run
Compact Flash based Smoothwall V3.0I think it's rd.
Since flash drives have a much smaller number of read/write cycles they can handle, the IPCop method for flash installs sets it up to run all your graphs and logs in a mounted ramdisk. It backs up these logs as well as cron to two tarballs in /var/log_compressed once an hour and on proper shutdown. The caveat here is that any proxy cache you use also is in the mounted ramdisk and it is not saved after a reboot.
I truly see the benefits gained from this. I have come to a point that all I want is a stable modem/router. I really don't need fancy graphs and extensive logs.
1GB is the most ram you can get on the Raq3/4 and Qube3.
mine is 128

I will upgrade those when I'm sure it will work this time and not die on me in a short period of time. It's hard to find PC100 512MB memory.
The size of the ramdisk can be adjusted, as of Raqop 1.4.21-2, I switched flash installs to use tmpfs rather than rd because it is superior and was one of the hallmarks of the 2.4 kernel over earlier methods, unlike the rd filesystem, it does not need formatting, it can be remounted at a different size while running with no data loss, and it has slightly less overhead so you'll have a few extra usable mb compared to rd, also because it does not need formatting as a block device like rd does, an unfilled mounted tmpfs will allow the unused ram to be used by the system so it hurts nothing if you have a 512MB mounted tmpfs but are only using 10% of that. The tmpfs is the method that will be used in IPCop 2.0.
Myself, I only use the proxy for filtering addons if at all and I set the cache size at 10MB. I do not run it transparently, that messes up my beloved Shoutcast streams.
Sounds great in theory

Whatever I try next, it will take at least 5 months before I see results.
Ok, with all that what am I using? I use a 512MB Transcend Industrial CF card using one of the pre-made CF images I posted.
I'm willing to do this, but while it all sounds great in theory I absolutely have lost every confident in CF-cards or hard drives

One of the reasons Brian and I wanted CF installs on a Cobalt was because the old drives for most of us are a waste of heat and power on a firewall appliance.
I have come to a point that this doesn't even matter to me either. First I want a stable router, than when I'm sure I can do whatever else is nice to do, such as power usage.
If you do go this route, be careful of any addons that may use the disk a lot, those will kill a flash drive in a short time.
I have never added those. I have no special needs

-------------------
This is my plan for now. Please feel free to correct me or point me to the right direction.
I tracked down 2 Seagate hard drives as used in raq3/4 and going to try it again. I will pay more attention to proxy and logging. Will try to shut those 2 down as far as possible in order to make sure hard drive is used as little as possible.
Here's my latest list of causes. I just throw in a cause whether I know it's possibly be the problem or not but you never know (like write errors which is cause by faulty memory, who would have thought that?)
list of possible causes:1. power? can power outage will be the problem? if so, why does this not effect any of my system but my router?
2. proxy
3. connection protocol? mine is PPPoA. could this be an issue?
4. DNS (somebody suggested this, tho I think this is based on connection problems rather than hard drive/ware failure, but who knows)
So my plan would be:
1. install again on a seagate 20GB HD and look out for proxy, logging and every other error.
2. install CF card and see how that works
Looking forward to your response. Thanks again for observing my problem

PS. euro = dollar (not in theory but in real world it is

)