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In the past I tried to run League of Legends on a Virtual Machine as smoothly as possible while consuming the minimum amount of resources.

Hi,
The main factor will probably be (video) drivers quality; Depending on how well is your friends hardware supported under Linux, result will wildly vary.
That said, to quote the WineHQ Wiki (http://wiki.winehq.org/Performance):
"Currently 80% of Windows performance is a high water mark, few games run faster. Many games run around 50%, which means there's a lot of room for improvement. If your game runs even slower there are probably some nasty bugs around."
Don't know where LoL stands here.

Linux is the best operating system for hosting games.
I have been hosting LAN parties at home with 6 computers for years. My Fedora server has been hosting games like: Battlefield 2, Quake Wars, Doom 3, Wolfenstein ET, Half-Life 2 Deathmatch, Counter-Strike:Source, Unreal Tournament 3, The Ship, and more...

The main problem you are going to have with hosting is that the game needs Linux native binaries for the game server. If it does, then you can install and run with a command line. Then you don't really need a super graphics card because everything is running in console.

As for gaming machines, Petch is completely right. Your machine can run Linux, but the best video cards for gaming are the GeForce 8800 and newer. If your old computers can handle that, then you can run games in Linux.

Now I have been testing many PC games in Linux with PlayOnLinux and they run great, but I havn't had a chance to test the multiplayer/networking capabilities. Just last week I tried connecting Titan Quest with a Mint 14 and Windows 7 but they couldn't see eachother. This is going to require more testing and trial-n-error.

I have a unique scenario with 6 computers and a games server. So its rare to find people wanting to do the same thing.

As far as I can tell, League of Legends' performance doesn't take any real hit from being run on Wine in Linux.

After installing vcrun2005, the load screen to get in game ran the same in windows as it does now. The game has excellent framerate, usually ~80fps for me (60hz samsung LED monitor and GTX570HD gpu).

I only noticed one discrepency with this, and thats that after a game or two it drops from ~80 to ~60, which is fine. Windows couldn't push it past ~60 for me usually either.

I also noticed that if I put my computer in suspend mode, and then come back, the Ubuntu OS runs fine, and all other apps and games, but in game LoL runs ~30-40 fps. I think it has something to do with RAM, either a glitch with my MOBO handling ram (I do have a minor glitch with my MOBO, I can't use ram slot 3 or it crashes on startup), or it has something to do with running league in x86 mode, since it only uses 3.25 gb of ram that way, maybe it's full up in that part of the RAM because of suspend state not clearing properly. That's just a wild guess based on what I've been studying about hardware recently, I'm no professional (yet).