It looks like the subdirectories are causing some confusing, so I'll try one last time to explain what this is all about.
A normal OZ / Hentges installation is flashed into the "ROM" of your Z. For a flash installation you need a flash image (called initrd.bin) which contains the rootfs in jffs2 format and a kernel (zImage for Collie, zImage.bin for Akita).
So, to install Hentges / OZ into the flash of your Z you'll have to download:
One kernel from $MACHINE/kernel/
One initrd.bin from $MACHINE/hentges-*-image*
The file hentges-*-image* is a compressed tarball which contains initrd.bin, you'll have to extract it first (winzip can do so just fine)
This isn't too complicated, now is it?
Also Hentges on Collie supports a so-called CardFs file. A cardfs file contains applications that can be installed onto SD or CF in addition to the apps shipped with a normal flash installation.
To use cardfs (which you really should on Collie) you'll have to download one more file in addition to the above:
One cardfs file from $MACHINE/cardfs
Make sure you download the GPE cardfs for a GPE initrd.bin and an Opie cardfs for an Opie initrd.bin (well, this should be obvious...)
To install, copy all 3 files (initrd.bin, zImage and cardfs*.bin) on your CF card and flash as usual. You'll be prompted to install the CardFF on first boot.
That's it, really!
Now to the other subdirectories / files included with this release
$MACHINE/ext2 contains - as the name suggests - ext2 loop images which can be booted directly off SD or CF using Altboot. The header text in that directory points to a FAQ explaining how to do that....
$MACHINE/tarballs contains a full rootfs (the stuff inside initrd.bin) in a compressed tarball. This is also to be used with altboot and this directory also features a header text explaining just that and where to look for more info.