Unlss mistaken, I don't believe you can boot straight from an iso on usb
how would you do the isolinux/syslinux.cfg/menu.lst
root (hd0,0) whatever
kernel ? /iso/vmlinuz
initrd ? /iso/initrd.gz
I don't think reg grub can do this
but, as you said earlier, GRUB2 can do this, seemingly
therefore you must first get grub2 going
With grub2 you can directly boot an (iso9660) ISO using its loopback option. This is great because it provides another nice rescue scenario - for example when using grml (the Debian based Linux Live-CD for sysadmins). You no longer need to extract kernel and initrd from the ISO to be able to boot it using the isofrom bootoption. All you need to do is put a plain grml ISO to your harddisk.
note the kernel append for grml
questions is can redhat do that?
root=/dev/sdxx rootfstype=ext3 liveimg
so maybe redhat can use that kernel append too?
editing for your usb device have you tried booting it yet??
title RedHat Live
loopback loop (hdx,x)/redhat.iso
linux (loop)/boot/isolinux/redhat-kernel isofrom=/dev/sdxx/redhat.iso boot=live quiet root=/dev/sdxx rootfstype=ext3 rw quiet liveimg rhgb vga=791 noeject noprompt
just edit that
where is kernel/initrd Inside the iso?
in boot or in boot/isolinux or where?
just replace kernel/initrd lines with where the kernel intrd are on iso
only grub2 can do this though...