In the case where /home is on its own partition, and the intent is to install to a new / and keep /home as is: I think putting the iso at /home/the.iso will work -- that is the top-level directory of that partition. Haven't tried it.
It should. I haven't tested it that way either as I have tons of other partitions I generally use. I'll give 'er a shot on the next RC release.
Just tested this and it won't work as the GUI installer will not allow you to select the partition that contains the ISO to be assigned as /home. The partition that contains the ISO will be missing from the list that allows you to assign /home to the partition.