One working option is to have whole rootfs on mmc card. The best is to have 1st partition as FAT for maximum compatibility and second partition formated as ext2 (or maybe ext3) with the rootfs.

advantages:
- no need to modify startup scripts in the rootfs, you can have exact copy of your original flash rootfs on mmc
- you have 2 independent systems to boot, one is a backup, you can boot second one if the main one goes wrong and fix it

disadvantages:
- approx 128mb of space is 'wasted' on mmc by copy of system files (original compressed rootfs takes ~60mb in flash but twice that on mmc card)

how to do it:
- get (and flash) my initfs modification to have on screen boot menu
http://fanoush.webpark.cz/maemo/#initfs
- clone you existing flash rootfs to mmc, second partition (/dev/mmcblk0p2)
- boot it
Some details are inside README.

It should be possible to add unionfs directly to initfs so it could be put on the top of whole rootfs (i.e. / directory) early in boot without any rootfs modifications for those who don't want to waste those 128 MB. But I won't do it because I don't call it a waste. I do like to have rootfs backup and two independent root filesystems.