1. Both the code base will have their own startup. One way to jump to apps "main" is to locate it at some fixed address and then just do a FJMP to that address. Is there any other way to achieve the same effect without having the need to locate the apps "main" at a fixed location.
Have a table at a fixed location (e.g. 0x1000) with pointers to routines called from below.

2. Since the Apps Code RESET VECTOR would be at 0x10000 location I think it should work if somehow I can retrive apps RESET VECOTR (PSW and ADDR) while executing in internal rom and do a RETI. This should force the program to start executing at apps "main". Question is HOW DO I RETRIEVE the RESET VECTOR across 64k boundary?
you can't have vectors but in the specified location, to do it, start the reset vector:
if (AppsActiveBit)
{
AppMain();
}
{
else
{
BootMain();
}

3. There will be 2 different interrupt vector table, one for each. Interrupt vector table has to have an offset of 16bits. That means the ISR routines have to be in Internal ROM. Else there has to be a JUMP
table in internal ROM that will redirect the interrupt, when code is executing from external ROM, whereas execute the interrupt when code is executing from internal ROM.
Has anyone ever written such JUMP tables?? Any ideas?
see answer to 1)

I need the flexibility to jump between internal and external memory as and when desired.
you may need a routine address table in lower memory as well.

Erik