I'm no expert, but I have managed to wipe my NAND, replace it with d+b to terminal, totally repartition the microdrive repeatedly, and then replace it with a CF card. And now it works!
Anyway, the OZ developers could tell you more, but AFAICT, all OZ needs is about 150 megs of ext2 in /dev/hda1, and it's then good to go. I have no idea where it puts the "altboot" bootloader, but it's got to be in there somewhere.
My partitions are as follows:
root@spitz:~/# mount
/dev/hda1 on / type ext3 (rw,data=ordered)
/proc on /proc type proc (rw)
/sys on /sys type sysfs (rw)
ramfs on /dev type ramfs (rw)
ramfs on /dev/.static/dev type ramfs (rw)
tmpfs on /dev type tmpfs (rw)
/dev/hda3 on /home type ext3 (rw,data=ordered)
devpts on /dev/pts type devpts (rw)
usbfs on /proc/bus/usb type usbfs (rw)
/dev/mtdblock2 on /mnt/nand2 type ext2 (rw,nogrpid)
/dev/mtdblock3 on /mnt/nand3 type ext2 (rw,nogrpid)
and /dev/hda2 is about 130 megs of swap. I hacked /etc/fstab to set this stuff up at boot, and it's working pretty well. hth -- wylbur.
ps. I live in Palo Alto. If you're close, we could hack a bit.