One way is to remaster knoppix. There are instructions at
www.knoppix.net . The basic idea is to boot off the knoppix cd, copy everything to the hard drive, (chroot) uninstall anything you don't need, install anything you do, follow the instructions to use the commands that come with it to pack it all back up into an iso. I'm trying to remember, but I think the knoppix CD's hold something like 2.5 GB compressed.
I would be interested in understanding how to make a very basic boot CD myself though. The basic idea (as I understand it) behind the el tollito boot specification is that a ramdisk gets created which is then treated as the booting drive. The most reliable way to attempt such a thing would be to follow online instructions to make a bootable linux floppy that holds your kernel and initrd. Then:
dd if=/dev/fd0 of=MyLinuxBootImage.bin
I may be missing something. I haven't done this, but I would expect it to work.