I've been doing remasters of Kantoix w/ squashfs instead of cloop. Not only does it give about 5% better compression it also compresses faster. MUCH faster. On an XP2200 w/ 1G RAM it takes about 15 minutes to compress down to 700MB. It is possible to remaster Knoppix w/ squashfs (I have no idea how) but the Kanotix kernel already supports squashfs. Something to note. The Kanotix kernel is not smp enabled.

I personally would be very interested to know exactly how you've set this up for your techs to build their own .iso's if you'd not mind posting some details.