I have heard of people doing this with WinXP and WinServer 2003 -- see BartPE page at http://www.nu2.nu/pebuilder/
I wish this could be done with Windows 98 SE.
Think of the advantages of having a stable, guaraneed to boot GUI on a CD-ROM that you could run 32-bit utilities from.
Could be a really nice "rescue CD on steroids" if you know what I mean.
Steve