Hi,
This seems similar in concept to what I have been working on for a while under the guise of Securizant Linux (sourceforge.net/projects/securizant).
An adaption of LFS, but a root file system disk image is built, which is then mounted (via loopback) read-only during the boot process. This image is never modified during the life-cycle of the OS.
There are scripts that will build the system currently in the sourceforge CVS that you may care to look at. They make use of a precompiled tools.iso toolchain image (500MB) that I can make available if you want.
Feel free to email me for more info.
Cheers, Daniel Bradley.
