Came across this software. I'm sure you're not new to the "copy and run it all in the USB drive" idea. A lot of folks have been doing this for quite a while.
Anyways this initiative is from some Stanford PHDs under the leadership of Dr. Monika (Moka?) Lam.
Their explanation of a LivePC (TM'ed as you can see already):
LivePCs™ are virtual PCs that you can create and share just as you can share the rest of your digital life (photos, music, videos, etc..) A LivePC contains everything needed to run a virtual computer — an operating system and a bunch of applications. You can create and share your own LivePCs, or use the public LivePCs created by others in our LivePC Garage™. You can use LivePCs on your desktop, or you can take them with you everywhere on a portable USB drive.
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