On first boot the LiveCD image could detect the presence of more disk space (partition size, presence of overlay mount or whatever) and offer to install an extended package set (from network, additional CD's, etc).
This way the LiveCD image could extend itself to become equivalent to a larger LiveDVD/LiveUSB image, transform into a spin, etc...
If a memory stick with an extended feature set is then installed to disk I would propose that the install routine asks if the user wants just a base LiveCD install, or include packages installed in the overlay.
Fedora Bugzappers volunteer triage team
I don't think that is the way they are intended to be used. Normally if you want more stuff in a live image you do that when you create the image. If you decide to do that after the fact, you can manually install stuff if you have an overlay area set up. I am not sure how prompting someone to do that is a good idea, when the vast majority of the time people aren't going to want to do that.
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