I just fell over this thread and thought I might be able to offer some info.
I had been developing on my xda II with the normal "official" ROM from Telstra(autstralia)/Imate which is wm2003 and needed to get my device running wm2003se because my software was killing pdas with second edition on them for some reason.
After some soul searching and a heap of bad press about my app I jumped in and had a shot at it.
Im so glad I did since I managed to reproduce the incompatability problem with my app and fix it. Not to mention wm2003se provided me with much better features than I previously had.
The way I understand it is this.
The ROM contains your standard windows stuff and the extended rom contains your desired applications that enhance windows mobile.
There are a couple of programs out there that allow you to unhide and unlock (and visa versa) your extended rom thus allowing you to access it as you would your storage card etc.
When you have it unlocked you can nominate what applications you want to install on your device when you hard reset. This is incredibly useful.
By nominate I mean get rid of any cab files that you dont want and copy any other cabs you do want to be installed. And editing the config.txt file to only install your desired items. Bare in mind the extended rom can only be 16MB in total I think.
The config.txt file is used by the auto installer and contains the list of what will be installed.
There is a fantastic thread all about this over at xda-developers.com and what applications the author considers to be required which he denotes with a *.
Its all info about upgrading the xdaII but from what I can gather should relate to any wm2003se extended rom.
The tools for unlocking the extended rom can be obtained from there too.
Thought this might help out a bit to unlock the "mystery" of the extended rom.