Mostly, except that the path to filesystem.squashfs in the initrd will
not be correct. Something like this should yield the correct path:
(cd ~/lbinitrd/binary; echo live/filesystem.squashfs | cpio -o -H newc) | \
gzip --fast > filesystem.cpio.gz
I would bother using a high compression here, it's just a waste of CPU
resources as the filesystem.squashfs is already compressed.
> At boot I get an error message, "(initramfs) Unable to find a medium
> containing a live file system". I'm guessing that the contents of the
> appended cpio archive isn't added to the initramfs.
If you still get that error after trying what I suggested above, you can
add »break« to the Linux command line parameters. This will spawn a
shell during the early boot stage. Once you get the shell check if
/live/filesystem.squashfs exists.