After considerable investigation, it seems that using the nRF5340 + nRF7002 combo with some realistic WiFi client comms enabled (eg. using MQTT) results in an image that's too big to OTA because it takes up more than half the Flash. Further, after considerable investigation I find all efforts to separate OS code from application code, so only the application code can be updated, have been thwarted by their intwined nature.
It seems the conclusion at this point is that, since nRF5 SDK is not supported, the nRF5340 + nRF7002 cannot be both be used as a WiFi client, and for OTA updates, unless you have external Flash to store the update image.
This conclusion comes after reading many articles related to this topic, and finding that all the suggestions for reducing Flash size (eg. CONFIG_NRF700X_AP_MODE=n in an attempt to rid the image of the 20% portion for "hostap" libraries, or compiling with size optimisations on) make no improvement at all to Flash size.
This result can be illustrated by building the MQTT sample and observing that the image size is 55% of the 1MB Flash size. The top two constituents are lib/hostap (27%) and wifi/nrf700x (19%). The application code itself comes in at 0.7%.
Is this conclusion sound? It seems an extraordinary result, that 1MB of Flash for a dedicated application core is not enough to run WiFi and OTA, even with a 256MB network core and a entire WiFi coprocessor. It also seems a significant limitation that despite occupying <1% of the custom code, an application cannot be updated separate to the ncs libraries.
If the conclusion is sound, then this may serve as an important portent for future efforts.
