Scrypt security proof weakness?

[Ryan Carboni <ryacko@gmail.com>]

Scrypt uses Salsa and SHA-256, correct? Given that SHA-256 is an
incremental hashing function, wouldn't a work around for the memory
hardness would be to compute each 512-bit block generated by Salsa at one
time before hashing it, thus reducing memory requirements to about a
kilobyte?