Use case: one USB drive with custom MBR, one text configuration file and one or more liveCD images. On boot-up, the user selects one of the images and loads that generic OS.
DOS (MS-DOS, FreeDOS, DR-DOS, ...), Windows 95/98/ME and boot loaders (Syslinux, grub, grub4dos, gujin, gag, mbldr, ...) boots, other operating systems must be aware of the memory mapping.
With SuperGrub2Disk http://www.supergrubdisk.org/wiki/SuperGRUB2Disk you just have to add a iso file into a specific folder and it will automatically be added to the bootloader menu. But AFAIK it does currently not support the memdisk solution.