[Nook Color Q&A, Help & Troubleshooting] Blue6IX:
If that's your decision, which is the same one I made, this is what I learned here:

-The MicroSD card itself can make running android a wonderful experience, or a torurous nightmare of force close issues on everything. All cards are not made equal. You probably want a SanDisk brand card, test your card with Crystal Disk Mark, and read Here and Here for more information on that part of it.

-I am running this Phiremod 6.2 image, dualboot between phiremod and honeycomb. You can just run it by default on the more stable phiremod without ever going into honeycomb if you want. I haven't updated it to phiremod 6.3 yet as the thread gives you the option for, 6.2 runs very well.

A rock solid package that works fantastically well, make sure to thank the people who made it if you like it - you can tell it's a labor of love by how nice it is.

Also, make sure that the battery is charged all the way to full the first time you put your custom SD card in.

To make the custom card:

-put it in your computer, fresh format if possible/necessary

-use WinImage to burn the image to the MicroSD card.

-use EASEUS partition software to extend the /sdcard partition to use the rest of the unallocated space on your MicroSD card.

...and that's really all there is to it. It can get confusing out there with so many options and configuration choices.

You may end up deciding that you like something better, but for a "no strings attached" look at android on the Nook color the image and tools I just linked are a good place to start.

Besides preserving your stock Nook color as-is, running from the sdcard lets you have a couple of different cards with different installs, and swapping between them is as easy as turning the Nook off and then back on again.

While the Nook is booted to it's stock configuration, you can plug it into your computer and transfer whatever you want drag and drop style into the internal memory of the device. When you reboot the Nook into your android sdcard install, you can use a file manager to browse to it and use it. No hassle pictures, music and etc... transfer to your android device.

The google market app "dual file manager" by medieval software is free and great for running back and forth between the internal and sdcard memory.

Also, for an sdcard install, get the google market app "sd speed increase" by diego stamigni. It absolutely makes a noticable difference in running android from the sdcard.

Two last app recommendations are both paid google market apps, but:

The "nook color power button" by otis8 provides you with an on-screen icon that emulates the hardware power button on the side of your nook. I have a case that covers mine, and a lot of searching led to this answer. You may or may not need it, but if you do this is the right answer.

"thumb keyboard" by beansoft, has completely changed my Nook experience in ways I didn't realize needed changing until I used it. The split keyboard makes thumb typing so much easier. The arrow keys I always seem to need were why I wanted a new keyboard, but with the customizable buttons and layout options available through this app...it was worth every last penny spent on it.

Every time I type something on the Nook, I am so glad I got this keyboard.

That should be enough to get you started, just make sure that if you install the image I reference above:

-After it boots into android the first time, let it sit and don't touch it for about 5 minutes. The first time it runs, it has to configure itself on the sdcard, which you don't see happening on the screen. A little bit fo patience this one time can eliminate some possible problems in the future.

-Log into and activate the google market from the app icon on the home screen first. If you delete this icon from the home screen, you may lose market on this install and have to either do something funky to get it back, or re-image the sdcard.

There is so much great information here, I was amazed and overwhelmed when I first started looking into it. This place has taught me so much in so little time - I love it here.

ETA:

One last thing is, I don't know anything about blue dot, i've only seen it in passing. My nook is updated to 1.2 stock. You should be ok, but make sure to read the thread of the image you download to make sure.

...and... by keeping your stock nook, you don't have a problem that others might. If using windows, an imaged sdcard can't be just formatted back to it's full capacity. Windows only reads the first small partition as the whole card.

If you boot the nook into it's stock software, and then insert the sdcard, the stock nook will let you format it right back to it's standard capacity and remove all the custom partitions on it.

Then all you have to do is pop the card out, put it in your computer, and burn a new image to it.