Not a great success with that one
However, playing today with the openelec-eden branch, I found that NBD has been integrated.
So why not iSCSI ? it's the same concept, and a lot of home NAS devices are starting to purpose it out of the box.
Anyway, if anyone is interested in using iSCSI to boot Openelec from, here are the steps (you will need a little knowledge on iSCSI there) :
1) get the open-iscsi package here :
eesprit.free.fr/openelec.tv/openelec-iscsi.tar.gz
(it's based on today openelec-eden branch, so if you have doubts about how it will work with another revision, just extract it in /tmp and do diffs on files. I only made the change for the linux kernels config on the ION/64bits project, if you want to try for another project type, just ask, I'll try to see what I can do)
2) extract the (1) tarball in an openelec source directory
cd /your/path/to/Openelec.tv
tar xfz /tmp/openelec-iscsi.tar.gz (or wherever you have downloaded it to)
3) Build Openelec : PROJECT=ION ARCH=x86_64 make
If you have any problem in this 3 first steps, just tell what your problem is.
Ok, so now, you should have a .system and a .kernel in the target directory... here comes the fun

4) on your iSCSI target, create a 5GB (or less, or more, as you want) volume, and give access to your "building" device and your target device (the one that will boot Openelec). I can't give a lot of help here, it's really target dependant, and if you are willing to use iSCSI to boot openelec from, you probably already know how to do that.
5) login on the iscsi target from your "building" initiator
6) You should now have a new /dev/sdX : partition it, as you would do for a USB key : create 2 paritions (System + Storage), System should be 200MB or 256MB max, no need for more.
7) format it (ext4)
8) mount it somewhere and install extlinux on the first partition : extlinux -i /mnt/somewhere
9) copy the target/ files on the first partition, as SYSTEM and KERNEL
10) create an extlinux.conf file :
2 options here :
1) you are using iPXE to boot, or a ROM that is able to transmit the iSCSI paramaters using iBFT, just use :
DEFAULT linux
PROMPT 0
LABEL linux
KERNEL /KERNEL
APPEND boot=LABEL=System disk=LABEL=Storage iscsi_auto vga=792 quiet
2) you are not using an iBFT capable boot code :
DEFAULT linux
PROMPT 0
LABEL linux
KERNEL /KERNEL
APPEND ip=dhcp boot=LABEL=System disk=LABEL=Storage iscsi_initiator=iqn.2010-04.org.ipxe:zbox iscsi_target_name=iqn.2000-01.com.synology:iscsitarget.xbmc iscsi_target_ip=192.168.X.Y iscsi_target_port=3260 iscsi_target_group=1 iscsi_username=yourusername iscsi_password=yourpassword vga=792 quiet
(Of course you have to adapt to fit your needs)
Now configure iPXE to boot from your iSCSI LUN (or whatever you are using to boot on iSCSI), and enjoy !
If some Openelec dev is willing to include it in the standard branch, like for NBD, that would be really nice. It does not make so much change, and is fully compatible with "normal" usage so...
Cheers !