All I can say is free up every shred of memory you can and devote it to program memory. I practically have to hard reset my PPC 2000 iPaq to free up enough resources to get Q2 to run. Also, sound does work fine with the existing version. A few months ago Chris sent me a real storage card, so I was able to test the full game datafile for the first time (before I was using a pak with all the sounds completely stripped out so it would fit on my tiny CF card). To my surprise sound worked fine. I had assumed sound would not work because it doesn't work in the emulator (while Quake I's sound does work in the emulator). Also, my original minimum memory requirements were based on not loading sound data.
Finally, as I have said, according to Compaq, Pocket PC 2002 introduces a memory cap of some kind that could prohibit Quake II from running on that OS. However that is yet to be proven for certain. If you can strip the audio files out of the pak, then by all means do so because the audio files represent almost half the memory requirements of the entire pak file.
Dan East