I think your logic makes sense if and only if Palm made it so you could download applications but had a soft limit (perhaps in a preference somewhere?).

This whole partition business... well, that's not quite as easy to reverse and it sounds like they originally did not want many applications installed.

Instead of making a unified storage, they ended up splitting it and now they have to un-split it. So instead of testing it one time back when the phone was about to come out, they now had to test that plus whatever they do to unify the storage.

Wasted resources, in my opinion.