To say the least, I actually haven't found any actual threads/websites that discuss the frugal install with *ubuntu. But I have done it with Puppy Linux and Damn Small Linux.
At the moment, I'm trying to do a frugal install of Xubuntu. I have accomplished in using the "loop" option to move the contents into the root of a partition: I chose /dev/hda7 to be root.
I'm somewhat doing things the same way I did with Damn Small Linux.
So far, the splash screen loads. It blinks, and the progress bar grows an ever so minuscule amount. However, afterwards, the progress bar stands still. It doesn't go anywhere, but there is light this ever so slight slice. But it looks like it's just part of the beginning graphic, not like it has done any work or moved a 0.000001 percentage. I see no progress.
After a while, it gives up and goes into a BusyBox.
I can see
an ls gives me the filesystem.
I don't know why I can see the filesystem but it didn't load all the way. Odd.
Either way, this is what I have for GRUB
kernel /casper/vmlinuz from=/dev/hda7 root=/dev/ram0 quiet splash