I got Knoppix to boot from the ISO using VMWare. Seems to work okay, but there appear to be some display issues. (Missing or corrupted text in dialog and selector boxes -- try viewing the list of screen savers; it's invisible.

Alternatively, Connectix VirtualPC will also boot it from the CD, but I was only able to get it to run in 256 colours due apparently to a lack of proper video drivers. (VPC emulates an S3 Trio 32/64 video card, so I'm assuming Knoppix doesn't have any proper drivers for this -- either that or VPC needs to be able to install VPC tools for video to work properly) Haven't yet figured out if VPC can mount an ISO file. (It doesn't appear to be able to yet as of 5.1)