Well I have started loosing hope.
May its only possible for some ISO's and sadly my iso doesn't fall on the category.
The problem is no one has ever done this so its like doing by trial n error method.
I am probably thinking of taking a different approach like executing a script file from the grub which would mount the iso temporarily then boot from it may be.
I am also working on the extlinux process which works fine and i am trying to automate it through a script file so lets see.
If this would have worked it would have been just perfect but then there is nothing that you can do.