I can absolutely recommend that approach... unlike the on-PCB flash you can put a normal filesystem on it (we use ext4 with great results) and you can upgrade it any time, 16GB SD Cards are now available and 32GB will be along soon. You can pop it out and use on a host via SD slot as well.
On the device I am working on we go a bit further and do true SD Card boot (the bootloader is on the SD Card, ROM on the CPU fetches and runs it) which has the advantage the whole this is unbrickable.
BTW for Fedora, we use a 2GB root partition to hold all the -devel and rootfs files and it's enough for our purposes so far.
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