In addition to the entry I found about the HD20 above, this one seems to suggest Apple knew all about formatting MFS 800K disks, though with a Plus. Certainly I cannot imagine why Apple would ever endorse using 2.0/4.1 with 128K ROMs.
http://docs.info.apple.com/article.html?artnum=1788
http://docs.info.apple.com/article.html?artnum=1788