Hum...
y'know I was just thinkin'
what didn't work was having the live distro with scratch pre-set up and one-click-running start of the appliance available in virtualbox.
perhaps not having the appliance mounted in virtualbox may have helped...some...still...there is size of the space the scratch environment needed...the overhead...that excess of 10 additional gb...that is the clincher I think...hm. Too much for the conversion tools...(and I did try a few methods)...

I think it's doable it would simply have to be conveniently be done...built after the fact...after burning the program-jacked-up iso onto a usb or card...and with the necessity of say a 32gb usb or card ...as well the ability to expand the distro's partition to fill that usb or card (which I'm not sure about...if that is possible..gotta look at that)...(since the typical 4gb allowance for persistence just doesn't cut it..it isn't enough for my liking..EDIT: I've never bothered with the possible thought of making persistent space bigger than 4gb. Just did some looky-loo-ing ....yes ...live usb/card distro partition is expandable ..AFTER the fact..after distro installation onto the device... using say...gparted...you can utilize the entirety of the space for additional persistence...so a full 8gb, 16gb, 32 gb or 64gb ~+ usb/card could be utilized for the live distro...(M$)Windows systems may have an issue with seeing all of it it though... )....THEN...installing the totality of scratch should work...and with plenty of space to spare for packing it all up.
Looking at the whole sitch...the best options I think are (off the top of my head) live distros by nature...compatible ......antiX is a prime candidate for such a process...with probably the highest probability of success..(antiX running design being built to be favourable to the live medium)..mind...I'm not saying it can't work well with lubuntu or lmde2betsy ...
For sure though...having a 12gb (at the lowest possible end) to (possibly) 20gb (at the highest end) one-click-and-run-scratchbox distributable (which is ridiculously high)... is at this time ...asking too much...(but I think there is something viable here...I can't shake the feeling)...had to try it though ...on the b-zillion-to-one off-chance it worked..
When shooting for the moon ...I never expect to hit it the first time..