Can Instapaper use the built-in iOS 5 dictionary and drop its current one from the download?
Possibly. Instapaper’s built-in dictionary has some useful features that Apple’s dictionary doesn’t offer, including words that link to their own definitions and support for other installed dictionary apps such as Terminology and foreign-language dictionaries. So I might be able to use Apple’s exclusively in the future if it gets some improvements, but for now, I’ll probably just make it an option and continue to bundle my own, which only requires about 16 MB of space on the device.