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That's exactly right. Here's how to think of it.
You are creating a read-only image when you run createrom.bat. Think of it like creating a CD or DVD image. Once it's created--that's it.
Therefore initflashfiles and provxml are just copying files from that image to the storage partition on your device. This is why you want to try to avoid too much of that--otherwise the advantages of "baking" that app into your ROM are negated.
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