In the FPC source, enter the compiler directory and type "make PPC_TARGET=arm". I've been having fun trying to make the FPC compiler from source as well. I found that I had to make the ppc386 compiler first, then make ppcarm.

I noticed that the page said that ARM9 support was still yet to arrive. Damn! That means I won't be able to use FPC to create GP2X applications because it has dual ARM9 processors.