Even more interresting than the post in itself (wich is very interresting) is the hack proposed by fishermen21 in the comments - http://gamesfromwithin.com/?p=428#comment-1904 - , wich consist roughly of triggering the low memory handling process at the start of the game while reading a video. Nice workaround if you ask me.
Also , maybe someone around here knows, or my question is stupid, but why isn't a virtual memory mechanism implemented into the iphone OS ?