4MB? Thats strange.
On my 7 inch Lenovo tablet, I can assign 512MB RAM to BasiliskII, not that I would need it.
As for ISO files, I can´t select those via the GUI either, but its possible to add ISO volumes in the .basilisk_ii_prefs with your favorite text editor, e.g Jota.
After adding the file by hand it shows up in the GUI as it should.
The prefs file is located at /mnt/sdcard/Android/data/net.cebix.basilisk in my case.
BTW, you may also set your preferred screen dimensions for BII in the prefs file, in case the Mac screen does not look right.