More feedback is needed.
Repartitioning has been done in the past, but like tansoftware said, it could be a bit risky; but thankfully we do have fastboot. Although I'm quite against it, (I've dealt with this before, and was never particularly fond of it) an apps2ext solution would probably be best (I thought someone did this a while ago?). Apps2ext is where you create an ext partition (usually ext2/3) on your sdcard and use that as an extended /data. In the event something is damaged (I'm assuming you mean the filesystem tansoftware?) fastboot would be able to get us back to relatively safe booting environment where we should be able to repartition the sdcard correctly.
Correct me if I'm wrong CEnnis91, but if the filesystem on the SD is damaged/corrupt, even a safe environment won't allow us to repartition back to original sd state. What I've known and tested way back in 2003 was that once internal storage is corrupt, system partition or recovery no longer identify that disk. Repartitioning/Reformating always fail as preset partition table is no longer identifiable. System & Recovery identify disk partitions through a preset partition table, when you repartition manually using external software, you change the partition table signature. System and Recovery no longer identify it or access it to repartition it back to normal, unless... Now here comes the tricky part. Samsung and HTC have both developed a way to restore bad/identifiable partition tables by releasing factory partition fingerprints to be used with ODIN. When restoring a rom image using ODIN, you have the option of selecting a factory partition fingerprint which allows full repartitioning & reformating of entire internal storage prior to writing rom image.
As far as I know, fastboot does not have that option and neither do we have a MotoACTV partition fingerprint to work or rely on. That is why I am skeptical on trying my test method on the watch for now. Again, my information dates back to 2003, when PDAs' internal flash were voltage dependent. Now with Non-volatile ram, internal flash has become way more stable, but same data read/write principles apply.
My information could be slightly outdated and would love to know more about how you were able to restore internal flash using fastboot without utilizing a factory partition fingerprint.
Appreciate your valuable insight.
PS: As for what more could be installed on this watch, trust me when I say this, we've barely scratched the surface. My attempts of building a fully functional rom have failed because of the limited space we have and it's been getting on my nerves lately