hm..., as Flash-Memory is getting cheaper and cheaper (nowadays an average 1GB SD-Card is only 10$ or less
) I would not break my mind on that. I do think that Apps can be started from removable devices, as it is not more/less than another harddrive.
As you said, you wont break any limit just with code, pictures/music are the big ones...(having a small screen-resolution and using efficient image-formats will probably not push your over 10MB, what is already very much in my view.)
Think of what filesize you would start thinking twice
The FileSize depends heavily on the type of your app. I wouldn't load a TextViewer that is 10MB, but probably a nice game.