Deploying POSReady2009 (XP) to a device with 256MB and embedded SMS client 2.5

I have several thousand scale devices I am trying to deploy POSReady2009 to without a great deal of success.
The machines mainly have 256MB of memory and I realise there are problems when trying to PXE boot WinPE 3.0 into anything less than 512MB. However I am not 100% on what the prospects are if an OS is deployed via SCCM OSD remotely? Obviously the boot image is staged and booted into when the machine restarts, but is this still held in memory at this point (and will therefore not work) or is the boot image read from the disk and the memory requirement no longer valid?
Also, these machines are currently running Windows XP embedded and have an embedded SMS 2.5 client which is nigh on impossible to upgrade. Indeed ccmclean fails to remove the client as does any msi uninstall-type removal. Running the configmgr client installation produces the error:
MSI: Cannot install over Embedded version of Configuration Manager Client.
So is client upgrade even possible? Is there any way at all to upgrade the OS on these machines to POSReady 2009 (which is basically XP in disguise).
Thanks