Here is how I installed the beta2 ISO manually to a partition, without burning a DVD.
WARNING: improper use of the following commands will likely destroy other partitions if you're not careful!!! This is not for the squimish and your mileage may vary:
# create /dev/sdaX
fdisk
reboot
#mount the ISO
cd /where/you/saved/the/iso
mkdir -pv /media/linuxmce
mount -v kubuntu-linuxmce-0710-i386-beta-2.iso /media/linuxmce -o loop,ro -t iso9660
# Create a filesystem on the new partition.
mkfs.ext3 /dev/sdaX
# Mount the new partition and go there
mkdir -pv /media/sdaX
mount /dev/sdaX /media/sdaX
cd /media/sdaX
# Untar the base.
cat /media/linuxmce/lmce-image/linux-mce.tar.gz_0{0,1} | gzip -cd | tar xvf -
# Put a few things in their place.
rmdir lost+found
mklost+found
mkdir -pv dev proc
cp -iv /media/linuxmce/lmce-image/firstboot etc/init.d/
ln -sv ../init.d/firstboot etc/rc2.d/S90firstboot
cp -iv /media/linuxmce/diskless-images/* usr/pluto/install/
# Find the UUIDs of the partitions we're goting to use.
vol_id -u /dev/sdaX # newly created
#> d43aaa52-a120-47f5-aae7-721aa5fe90a7 # mine for example
vol_id -u /dev/sdaY # existing swap
#> 593b77dd-54c8-42cd-acb7-2d7c76c2c7f1 # mine for example
# Use those numbers to edit the following files:
vi boot/grub/menu.lst
vi etc/fstab
# You may want to skip this one if you only have one NIC.
#vi etc/network/interfaces
sed 's/eth0:1/eth1/g' -i etc/network/interfaces
# Let the system detect your NIC(s) instead.
#vi etc/udev/rules.d/70-persistent-net.rules
sed '/"net".*"eth."/d' -i etc/udev/rules.d/70-persistent-net.rules
grep '^mysql:' etc/passwd | cut -d: -f3,4
#> 109:119 # 0704, 0710 beta1-2
# Change ownership of the database files.
find var/lib/mysql ! -user root -exec chown 109:119 '{}' \;
reboot
Everything is done as the root user, and you will need to replace /dev/sdaX and /dev/sdaY with the partitions you created or want to use. You will also need to configure a bootloader to start your partition, I used the existing GRUB install on another partititon and added extra targets to its /boot/grub/menu.lst.
No guarantees that this will give you a properly working system, but so far everything seems to work fine for me.
I tried adapting those instructions to the FAT32 partition method that I'd posted (but which booted me into only initrd with the partition mounted not on / but on /root), but it still failed the same way. So I deleted the partition and started over using exactly those instructions (not the FAT32 adaptation of the "boot from USB Flash"). It still failed.
I created a 9GB partition as /dev/sda3 to accommodate the decompressed contents of the ISO, that total 7733028B on my partition. I got the UUID of the new partition and the existing swap partition:
# vol_id /dev/sda3
ID_FS_USAGE=filesystem
ID_FS_TYPE=ext3
ID_FS_VERSION=1.0
ID_FS_UUID=78785b3c-875f-4e35-8529-09f0e63d96cc
ID_FS_LABEL=
ID_FS_LABEL_SAFE=
# vol_id /dev/sda5
ID_FS_USAGE=other
ID_FS_TYPE=swap
ID_FS_VERSION=2
ID_FS_UUID=39fa5a1b-76ae-405e-b87b-945965e2fdda
ID_FS_LABEL=
ID_FS_LABEL_SAFE=
Then I edited the partition's boot/grub/menu.lst:
title Ubuntu 7.10, kernel 2.6.22-14-generic
root (hd0,2)
kernel /boot/vmlinuz-2.6.22-14-generic root=UUID=78785b3c-875f-4e35-8529-09f0e63d96ccro quiet splash
initrd /boot/initrd.img-2.6.22-14-generic
quiet
title Ubuntu 7.10, kernel 2.6.22-14-generic (recovery mode)
root (hd0,2)
kernel /boot/vmlinuz-2.6.22-14-generic root=UUID=78785b3c-875f-4e35-8529-09f0e63d96cc ro single
initrd /boot/initrd.img-2.6.22-14-generic
and the old menu.lst on /dev/sda1 (the 0704 active root partition mounted on /):
### END DEBIAN AUTOMAGIC KERNELS LIST
title Ubuntu 7.10, kernel 2.6.22-14-generic
root (hd0,2)
kernel /boot/vmlinuz-2.6.22-14-generic root=UUID=78785b3c-875f-4e35-8529-09f0e63d96ccro quiet splash
initrd /boot/initrd.img-2.6.22-14-generic
quiet
Then edited the sda1 /etc/fstab:
# <file system> <mount point> <type> <options> <dump> <pass>
proc /proc proc defaults 0 0
# /dev/sda1
UUID=eae0e501-b376-42a3-991c-9f6f81a148c7 / ext3 defaults,errors=remount-ro,user_xattr 0 1
# /dev/sdb1
UUID=1b6d32f8-21f0-4c8c-9252-0ba4175bfdce /media/sdb1 ext3 defaults,user_xattr 0 2
# /dev/sdc1
UUID=aeb4d8bd-d55d-417e-b0fc-cde3267d954b /media/sdc1 ext3 defaults,user_xattr 0 2
# /dev/sda5
UUID=39fa5a1b-76ae-405e-b87b-945965e2fdda none swap sw 0 0
/dev/scd0 /media/cdrom0 udf,iso9660 user,noauto 0 0
When I reboot, I get the menu.lst that's in sda1, and boot the "Ubuntu 7.10" that I just added. As usual, it boots into only initrd and stops. Mount shows that this time, there isn't even an sda3 mounted anywhere when it grinds to a halt.