I haven't read a linux book in a while. I think
The Linux Bible was a good one (obviously this is the latest.
I would also suggest grabbing the
O'Reilly pocket book of linux commands. I really like 0'Reilly books, I imagine there
in a Nutshell book for linux would be good also.
As for Distro's the two best for learning the inwards, are Gentoo and LFS (Linux from Scratch). Not too much of a difference between Gentoo and LFS, except Gentoo gives a package management so IMHO it is easier for long tearm usage. I've seen suggestions before of people to get LFS working for a week or two, then dump it and load up Gentoo for further learning. Getting X and things to run can be a hassle without a package manager. The documentation provided by Gentoo is also pretty good. Their forums are active and provide decent help.
I use Gentoo, so I am a bit biased, but it really does require you to do a lot from scratch, and edit a lot of files. The new docs suggest you start from a Stage 3, and it is quite a bit easier. If you want to fool around you could build you a system from a Stage 1, I haven't done it in a while but it does expose you to a lot of knowledge.