Interesting approach; I do similar but different things to achieve much the same end.

1. I use 32-bit Knoppix CD to define a minimal Knoppix LiveUSB with reiserfs persistence.
2. I add programs I like that aren't in the initial LiveUSB such as M$-ttf-corefonts,
flashplugin-nonfree, geany & chromium, and a few special files of my own and then
convert all this additional stuff into a KNOPPIX1 overlay.
3. Then I renew the persistence file by reformatting with gparted.

Among the special files in item 2 is a small file which automates part of the new-overlay
process.

My 2Gb SanDisk LiveUSB has a 1.14 GB Fat32 partition with 356 Mb currently free and
a 718 Mb reiser partition with 603 Mb currently free. Much of the 'new' reiser material is
'new' cache information which I ignore in making overlays.

If-and-when I develop any significant new stuff in persistence, I will make a second overlay,
then a third, etc. But so far, I expect I may not need any new overlays if Klaus K makes
his own upgrade sometime later this year.

I see very little necessity in re-mastering, so long as most of my changes are additive and
not overlapping previous overlay material in some way.

It is also true that the CD-size Knoppix almost fulfills my needs. The DVD-size Knoppix
has many programs I'd never use.

In your scheme, I think so long as you carefully choose which overlays go in
/mnt-system/KNOPPIX/, you may pick and choose just which ones will be overlaid.
You can hide any others in /mnt-system/ (or someplace else) and they'll not be acted upon.