Already possible I believe. I think there's a persistent overlay
kernel command argument that you can point to use a file on your USB drive if you're
booting from CD. I may be wrong on this though.
I research for that..
It's easier just to boot from USB though. Faster all the way
around. CD/DVDs take ages to boot. I know persistant overlay works swell with this method.
I use it personally. Is booting from USB not an option for you?
Nope. My pc won't boot from stick. :S