ISO to USB tool
I started from a minimal ISO taken from the centOS website (or mirror).
Then I used the livecd-iso-to-disk tool from the livecd-tools package this way:
sudo livecd-iso-to-disk /media/500G/ISO/Fedora-16/Fedora-16-i686-Live-LXDE.iso /dev/sdb1
Did not work out of the box
I mainly had 2 problems, but I think only 1 is related to the ISO building. The other one is more about something I did not investigate further.
First problem
The USB booted and wet through the Anaconda installer but:
When the installer looked for the existing disks: "The installation source given by device [''] could not be found. Please check your parameters and try again".
I checked the USB filesytem created with the livecd-iso-to-disk, and in the syslinux.cfg file, I only have:
append initrd=initrd.img stage2=hd:UUID=5E46-DFC2:/images/install.img repo=hd::/
According to this forum post, I modified my append line to be:
append initrd=initrd.img stage2=hd:UUID=5E46-DFC2:/images/install.img repo=hd::/ method=hd:UUID=5E46-DFC2:/
Then I ran into the second problem...
Second problem
The installer did not find the iso file on the USB medium: I just had to copy the minimal iso on the USB and it worked.