The ability to distinguish between hadronic W and Z decays is one of the most challenging requirements for the future linear collider detector. Such sensitivity requires unprecedented jet energy resolution, which may be possible with energy-flow algorithms. A calorimeter that is optimized for energy-flow must have fine lateral and longitudinal segmentation. Small scintillating cells with wavelength shifting fibre readout represent an attractive basis for a digital hadron calorimeter that trades dynamic range for superior granularity, at an affordable price. We present the expected jet resolution for such a device, based on Monte Carlo simulations. Then we describe the initial prototyping studies. In particular, detailed studies are presented on cell performance under different combinations of manufacture and assembly.