Kudos to all the contributors, esp Milhouse and Schmot!!!
Not being a Linux-savvy-dude I was however able to follow the procedures and clone OS2007 to SD.
2 questions though:

1) it looks like rootfs takes an extra 100M or so...is it because initial fs is compressed (jfss2) and the cloned one isn't (ext2)?

2) VERY IMPORTANT FOR ME: can I flash the OS on SD to upgrade to OS2008? This would be AWESOME...to preserve OS2007 on flash and toy with OS2008 at the same time.
My biggest beef with OS2007 is crappy Skype performance (100% crashes after 10 min or so...no matter what I tried).

Thanks a bunch....

PS. In case anyone wonders if the Dell regular Bluetooth keyboard works (normal size, can't find the model # now)..it does - pretty good.