NestedVM I think is going to be slower than pure Java because of the array bounds checking on the int[][] that represents the MIPS virtual machine memory. It is such a good concept but might not perform well enough right now (until phone manufacturers add NestedVM support (if they do!), most stuff is going to be SLOW for now, n'est-ce pas)? Whilst it may be able to unpack JPEGs without error, speed is of no small concern! :)
Nothing else in what you've written sticks out, which isn't to say that it's right or wrong! The principles sound (mainly just listening to choice of words and language to be honest) like roughly standard best practice but I haven't thought through the details of everything you've said. As you said yourself, this really ought to be several questions. But of course doing this kind of thing is not automatically easy just because you're fixed on perhaps a slightly different architecture to the last code base you've worked on...! ;)
My thoughts:
All your comments on C interface compatibility sound sensible to me, pretty much best practice except you don't seem to properly address memory management policy - some sentences a bit ambiguous/vague/wrong-sounding. The design of the memory management will be to a large extent determined by the access patterns made in your application, rather than the functionality per se. I suiggest you study others' attempts at making portable interfaces like the standard ANSI C API, Unix API, Win32 API, Cocoa, J2SE, etc carefully.
If it was me, I'd write the library in a carefully chosen subset of the common elements of regular Java and Davlik virtual machine Java and also write my own custom parser that translates the code to C for platforms that support C, which would of course be most of them. I would suggest that if you restrict yourself to data types of various size ints, bools, Strings, Dictionaries and Arrays and make careful use of them that will help in cross-platform issues without affecting performance much most of the time.
