I haven't really looked through all this, but felt I'd cover the basics of fully booting from SD. I have done this before (not on the touch specifically).
The basics is, only uRamdisk matters initially. You have to unpack it and modify the mount points, which seems to have been figured out already.
The second part is the vold.conf it needs to be modified to mount your "media" partition on the SDCard and also your "Media" on your emmc (if you want both).
(Seems this is covered a few posts back)
However if you mount the emmc as the sdcard as opposed to the "built-in" media, there's a chance you might end up formatting your emmc if you ever use the Format for SDCard, I remember I had this done for the Nook Color and the format button and it completely wiped the SDCard, so that might be hard coded and unaffected by vold.conf, it'd be something to test if you're willing to risk it.
A few other things to keep in mind when doing this, if you deregister either the sdcard or the actual emmc, the other one will end up forcefully deregistered if it syncs with BN. This may deregister both if you by chance deregistered and reregistered then tried to use it... so basically, always keep a clone of such changes you make to one so you can apply it to both.
Anyways I think that's about it, have fun.