I'm who done that IMGRF. On it's page is explained why is not possible to run all SW. There is support for ST and MSA formats only, and that is enough. No way to use STX images - they are done for emulators, which run on 50-2000x faster computers . In theory, you could use STX image on Atari self, but then:
1. It self would eat up to 2MB RAM.
2. Code to dealing with would eat another 500KB.
3. Work of SW would be terribly slow, so you would become a coffee junkie
4. All above is actually not possible, because game code allows not calls of STX handling code.
It was compared often to Virtual CD SW for Windows. I must say that basic concept is same. But main difference is that in Windows you don't have direct HW access - everything goes via OS, drivers - because that's the only way with modular computer, where can have diverse disk controllers, graphic cards, etc. In case of Atari there is always same FDC chip, so lot of SW, mostly games does direct access to it. That can not be translated on fly to hard disk access. So, Image Runner can run only SW which accessing floppy via TOS.
I'm currently about doing new version of Floppy Image Runner - that will work in way that images will not go in RAM, but will be accessed directly from hard disk. That self is not hard to achieve, but doing it so, that no RAM is occupied with hard disk driver is little harder - and it is very useful, since lot of SW is sensitive on RAM area address from which run. Called memory problem too - even on 4MB machines you may get error in case when program's start is higher in RAM than max value for proper work - and hard disk driver with it's buffers is what usually causes it.
Not using RAM for images gives other benefits: may have much larger images, up to 32MB, so can join all files from multifloppy SW in one image.
The concept will work best with cartridge based mass storage - because then all driver(s) can be in cartridge, not taking RAM.
Famous Schrodinger's cat hypothetical experiment says that cat is dead or alive until we open box and see condition of poor animal, which deserved better logic. Cat is always in some certain state - regardless from is observer able or not to see what the state is.