Looks like after some discussion on the squeak list on "top down" versus "bottom up" a new contest has started: Building the smallest image to get a maintainable core. There is already a standard minimal image available (585kb). M. Fritsche has created a major shrinked image these days from an old 3.0 Squeak with basic networking. Its a 987kb image. Craig Latta has created much smaller images for flow - unfortunately his image building code is not (yet) available.