Description of problem: Currently (using the LivePayload) the contents of an image can be transfered to a newly created filesystem using rsync (IIRC). As ovirt-node is moving to anaconda, and we want to stick with images, we'll need a way to transfer an image byte by byte to a logical volume. Additional info: Another change is needed to create a writable thin-volume snapshot atop the populated thin logical volume.
Using the liveimg kickstart command you can use a variety of sources for the images including squashfs, mountable filesystem images and tar.bz2 trees. I am opposed to returning to the days of byte-by-byte copies and then resizing things. The current methods are much more flexible, allowing you to deploy images onto a variety of target filesystems instead of being locked into the source's filesystem type.
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If this is reconsidered, the it would also be good to support "streaming" binary images to disk, to prevent a problem when the filesystem images are to large.