Let me go over the calculations again. MC changed build height and until we get dynamic chunk height, that means double the chunk data size:
ChunkBytes = 16 * 16 * 256 * 2.5 = 160 KiB
By default, a player has ViewDistance of 9 (configurable in INI), which means they see (9 + 1 + 9) x (9 + 1 + 9) = 19 x 19 = 361 chunks.
This means that we have about 56.5 MiB per player. To be able to compress chunks and stuff like that, the server needs about 10 MB runtime RAM, independent on the number of players.
Also, from what I've heard, RasPi's RAM will be shared with the GFX chip, at least 32 MiB must be allocated to the gfx. That means 224 MiB RAM at most for the system. Let's assume generously that the OS will consume only 8 MiB itself. That leaves us with 216 MiB RAM for MC-Server, or three players.
Now, there's one more thing to consider. MCS currently unloads chunks very lazily, so it's perfectly normal for a single-player server to have more than 1000 chunks in memory. This further breaks our assumptions and brings RasPi next to unusable for MCS.
Sure, we can modify MCS to unload chunks immediately, but no-one has bothered so far
There's hope though. Since most chunks will be about 3/4 empty, RAM could be saved by simply not having those 3/4 air blocks in the memory. FakeTruth seemed to enjoy the idea of implementing this particular feature.