Python should I use threading
Depends on whether you need them to share data and how involved the sharing is. Other than that, from a speed point of view, for a multiprocessing machine, threading won't give you much of an advantage over separate processes.
If sharing can easily take place via a flat file or database then just let them be separate rather than complicating via threading.
I currently have a couple of small applications < 500 lines. I am intending to eventually run them on a small LINUX ARM box. Is it better to combine these applications and use threading, or continue to have them as two separate applications?
These applications plus a very small website use a small sqlite database, though only one of the applications write everything else currently does reads. Due to constraints of the target box I am using Python 2.6.
I am using SQLite to prevent data loss over several days of use. There is no direct interaction between the two application though there is the potential for database locking issue especially during period data maintenance. Stopping these issue are a concern also the foot print of the two applications as the target devices are pretty small.