This is a very common use case, in fact, Amazon Web Services has been doing things like this for years, and Openstack does very similar things (for distros supported on Openstack).IMHO we should look at a tool similar to debootstrap/febootstrap that we can use for Openstack and/or ovirt.Maybe drakx-in-chroot/draklive would do, but the Openstack tools should give us some means for users to access the functionality, as well as APIs that can be called by other automated systems.