After preparing a persistence file the standard Debian way, and adding a typical Debian-type persistence boot stanza

title Devuan 1.0.0  sda1 persistence sda8
      kernel (hd0,5)/boot/dev100/vmlinuz bootfrom=/dev/sda1 live-media-path=dev10/live boot=live persistence persistence-path=dev10_0p  username=devuan keyboard-layouts=no  nomce  tz=localtime
      initrd (hd0,5)/boot/dev100/initrd.img

I booted the system from grub boot menu in kvm. Worked perfectly at the first try, so now I have Devuan Jessie with persistence installed. Right now, I can't boot Devuan natively without sacrificing wifi connection on this computer, but I may copy the system to an older machine, It's just three directories with a few files: live-directory with squashfs image, perssitence directory and boot-files directory.

And now I can add an ASCII image in exactly the same way. Backing up the persistence file, it is always siimple to revert if testing under kvm shows that something has gone wrong.  And when a number of components have been successfully integrated, i repack ("remaster") the system to a new squashfs file, set up a new persisitent image and continue.

Not everything belongs naturally in a compressed image, however. Files already compressed, like Java jar files, don't shrink much on compression, if at all. They are better stored on their own partition, or on their own loop-mounted image, if we want to handle as few files as possible.

I find that it is still efficient to conform to the 4GB filesize of FAT32 for such files -  larger files /file collections belong on separate storage partitions, I routinely use one, mounted on /store.

I very much appreciate your posts on this!
I have used a setup from a similar, but far from identical, approach with Knoppix and Debian Live as my basic computer configuration for about 10 years, and I have no intention to change that. One important feature, is that it provides a very clean way to do multi-booting.

It involves compressed images and a persistent (loop-mounted) store - which may well reside on a Windows partition without initrd (minirt) tweaks-  basically two files plus kernel and initrd, in addition to volumes that are mounted as needed.  Changes to the compressed store is routinely handled by overlays in Knoppix, but I prefer to recreate ("remaster") the compressed file. It is not very hard or resource-demanding. The whole process took ca 10 min for a new 3.7G squashfs image for Debian 9.1.0 the other day, including things like darktable and dia, mysql and mariadb, octave, R and wxmaxima - and VMware Workstation 12.5.  I use the old legacy-grub for booting.

I would like to do this with Devuan too, and from your posts, it seems to be possible even without tweaking the initrd. (Such tweaking was occasionally done with Knoppix, for instance in order to use squashfs instead of cloop, or creating a pure 64 bit version as a hybrid of Knoppix and Debian.)

I'll try it out w/Devuan 1 and report the results.  I may also try with different kernels, as the stock 3.16 in practice does not work with latest VMware Workstation, and is very hard to get working with several newer pieces of hardware, like the Intel 3165 wireless.