What we're talking about here is a "Frugal install". You put the kernel, initrd and compressed system images from the Live iso on the hard drive, then boot it much like you would from a CD. If you add the "toram" option, everything gets loaded into RAM and runs from there. With the likes of Puppy, Tinycore and DSL, this works very well as their images are small. The process is fast and doesn't gobble up a lot of memory. VL Live, a more traditional distro and not intended for this kind of setup, is significantly larger. You will need gigs of ram. Loading everything on boot will take a long time. I've done it just for experimentation but didn't find it to my liking as far as everyday use goes.
If you want to try this I'll dig through my notes and see if I remember the exact steps.