Well, no-one's said I'm mad yet, so let's see if I understand what needs doing while I wait for a multi-gig backup over USB1, here's what I think I need to do on my device which has a currently working ED setup...

1. Format media and make directory, (.ED perhaps?)

2. Mount the image file (mount -o loop /home/user/MyDocs/debian-m5-estel.img.ext3 /mnt/ED).

3. Copy all of image file to directory (cp -R /mnt/ED /media/mmc1/.ED)

4. modify /home/user/.chroot, to make it point to include, in the relevant position:
IMGFILE=none
CHROOT=/media/mmc1/.ED

5. Edit closechroot script (where is that located?) as per Sulu's post 3095 above.

6. ...

7. Profit

At the risk of jinxing myself this seems deceptively easy. Are there any (what are the) immediate gotcha's I'm missing?