You can't flash to ram, you can however flash a ram image to rom, or as you stated a rom image. A rom image runs directly from the rom and leaves you with a little bit more buffer space (about 350 kbytes) which could give slightly better battery time. To update a rom image you will need to load a ram image either from flash rom if you have one flashed or from the hard disk. If you flash a ram image it will be copied to ram on boot and will run just as a normal ram image loaded from the disk, and (afaiu) you'll not need to load any other image to update it in the flash.
The big advantage however is the faster boot, especially when using dircache, if rockbox is flashed it will not need to scan the disk on boot.