If you follow Paul Sokolovsky's blog you'll know we've been developing some recipes for building initramfs images using OE. I won't repeat the details here, check Paul's blog for an overview but I will describe the loopback booting module (since he hinted so politely).
First, why would you want to boot off a loopback device? The most difficult thing for new users coming to Linux is probably installing it. You have to understand how to partition a disk and hope you don't accidentally wipe all your data in the first place. To make things quick for testing and easy for new users, over at Hack&Dev we usually release a boot pack which contains a kernel zImage, an initramfs and a root filesytem image. The user just unpacks all these files into the root directory of a memory card, installs Cocoboot and taps boot, no dangerous and confusing partitioning required. So after Paul showed me his nifty method for building an NFS booting initramfs I couldn't resist adding another recipe that you can use for loopback booting. We later went on to merge them into a nice modular system that you can plug in whatever boot methods you need.
Okay, how to use it? First build an initramfs image with the initramfs-module-loop package installed. The easiest way to do this is just bitbake initramfs-image. Next pop the initramfs in the appropriate place for your bootloader (or compile it into the kernel) and add to the kernel command-line something like
root=/dev/loop looproot=/dev/mmcblk0p1:rootfs.ext2
The initramfs will note the root option and start the loopboot module which will mount partition one of the MMC card (mmcblk0p1), then loopback mount the rootfs.ext2 and finally switch_root to it. The full syntax for the looproot option is
looproot=[device:]file[:offset]
device is the device file resides on, file is a filesystem image and offset is the offset into the image to mount from (see losetup(8) manpage, the -o option). In theory you should be able to include multiple looproot options and to allow recursive mounting (ie an image within an image), but this is untested. So to boot an image off the LifeDrive's data partition you might use something like:
root=/dev/loop
looproot=:/dev/hda:91814912
looproot=rootfs.ext2
Note I'm giving a block device as the file argument here. This is because Palm OS writes an invalid partition table (their partition start/end offset calculations are wrong) to the HDD so we have to use a loopback device to manually specify the offset into the disk. The second looproot option then will mount the filesystem image.