live CD question

[Haidut]

Hi all,

I am trying to build a custom Dragonfly live CD and have some
questions. I am basically following the instructions for NetBSD posted
here:
http://wiki.netbsd.se/index.php/How_to_build_your_own_NetBSD_LiveCD
In the article they have "Old Way" and "New Way" for building the live
CD. I am not sure if these two ways are completely independent or do I
have to follow some of the steps in the old way and then jump over to
the new way. For example in the old way they list the following steps:
Creating the directory tree
Now create another directory with a custom directory tree with files
needed to run NetBSD (/dev, /etc, /tmp, /var ).
Creating the file system image
Create file system image from your directory tree for the LiveCD.
makefs -s ${FS_SIZE} -t ffs md.img ${IMG_DIR}
(where ${FS_SIZE} is the size of your md.img and ${IMG_DIR} is where
you have your custom directory tree ).
Inserting the Image
Now you need to insert the created image into your kernel, which
will then get extracted >>off the kernel and mounted as a memory file
system:
mdsetimage -v -s netbsd md.img


These steps are not listed in the "new way" but they seem necessary to
me. For example, creating /dev /tmp /var and inserting them into the
kernel seems necessary even though it's listed in the old way and not
listed in the new way. So do I have to still follow them or can I just
follow only the "new way" instructions?
Also, I am not sure if the method described in the article can handle
compressed filesystem for the live CD? I want to make a live CD that
will have a lot of software on it, and without
compressed filesystem it cannot have more than 700MB of software on
it. The official NetBSD live CD supports a compressed filesystem
(something to do with compressed VND) so that's why it can include KDE
and other large software packages. Do you think the NetBSD
instructions in that article provide that functionality?
And finally, I assume that I can just install software into the
folder used to make the live CD (in the article it's called "/isodir").
So if I am following the instructions on a system that is already
deployed with KDE and other software then I can just copy the folders
into "/isodir" right? For example:
cp -a /bin /isodir
cp -a /sbin /isodir
cp -a /lib /isodir
cp -a /usr /isodir
and so on....

Is that correct? Please let me know and thanks.