I have created a page "Howto Add Custom WinPE 3.0", You can get a detailed explanation over there.:http://erpxe.org/index.php/Add_Custom_WinPE_3.0
To boot from ISO you'll need to use memdisk or something similar, I don't know if it will be successful or not.
I think WIM is a much better solution since it can be compressed.
Also most WinPE 3.0 ISO files have a WIM file stored within them so just extract it and you are done.
In our WinPE 1.0 we used an ISO file in order to simplify matters for most users,
but SDI is a much more efficient way of loading Windows PE 1.0 so,
in the larger WinPE 1.0 plugins we do use SDI with NTFS compression.