GRUB2 can boot from loop-mounted ISO files if the OS support it, some examples can be seen at https://help.ubuntu.com/community/Grub2/ISOBoot/Examples. This allows tools like SystemImageKit to boot from a variety of Live ISOs stored on a disk.
It would be great if GoboLinux could boot from an ISO stored on disk in this way, ideally by providing a loopback.cfg file that would make this super easy.