Once you've got a working system, you'll more than likely want to add some packages. Most software now uses autoconf so I'll give a quick example on cross compiling.
In this example I'll use modules-init-tools. This will give you insmod, rmmod, lsmod etc. You could build module loading support into BusyBox, but it was giving me hassles at this stage so I went for this option.
Download the latest module-init-tools from here. Extract and change into the new directory.
Run configure with the following:
$ ./configure --build=`config.guess` --host=mipsel-linux --prefix=$PROJ_ROOT/rootfs $ make $ sudo make install
Once again, you'll need write permissions to the root filesystem for the target. Which is why you probably want to set up sudo as described in Host Setup
Next: Compiling Dropbear