Question: Can you drop the number of c40 processors on the PPDS from 4 to 3 or 2?

Answer: Yes, you can change the definition file (board.cgf from 4 processors to 3 or 2. But you will also need to to take care of hardware isolation of that processor. i.e you will need to account for not leaving the scan path pins open on that processor. Some of the earlier versions of the PPDS did have a jumper scheme to isolate out one of the C40 processors.