The Recording Presets in Voodoo actually work, but to the limit. If you set it to Loud Environment, the recorded level drops quite a bit. Unfortunately it doesn't make the sound much better. I guess that's the best Supercuirio could do, and I see that he did try to adjust the gains. If the microphone itself is distorting there's nothing can be done.
I haven't changed anything that would affect memory, except added some stuff to the kernel (governors, swap support). The additions were not that big, maybe about 10KB. You didn't use any different lowmemorykiller settings in init.d or anything like that? What memory are you checking, Andorid? It can be misleading, Android tries to stuff as much as it needs into memory. Check /proc/meminfo, MemTotal, that's how much memory is left to the system. Mine reads 330916 kB.