but i saw a full RAM image on OZ site
I think you are mistaken. Your Zaurus works just like a PC:
Internal Flash is internal storage, like a hard-drive in your PC
External Flash is external storage like a USB-Stick or a CD-RW.
Applications (including your operating-system) are loaded form storage into RAM. It doesn't matter if you load Cacko from internal or external storage! Your amount of free RAM will be the same.
Your PC has almost unlimited RAM, because the operating system moves currently unneeded programms from RAM to your harddisk. This is called swaping. Through swapping, your PC has allways free RAM.
You can do the same with your Zaurus and create a swap-File on your storage. But, be warned: Flash can be ruined by too many write operations!
Therefor, create your swap-file on your SD-Card wich can be replaced. Also, many SD-Cards have Lifelong warranty - your internal storage has ony 1 year.
Greetings