Basically, you'd need on big flash ROM drive, probably about 512mb or so. Because even though Win2k takes up 1.2gb, only as much memory as youre using when it settles down is how much it actually loads. Give and take a few megs in the process for various purposes. The boot image would be modified as necessary.
512 would more than likely be enough, and if you had a sustained transfer rate of 100Mbps, thats only a few seconds...
Last time I checked, 512mb of CF was only like $200 or so. In a year or two, itll be half that.
This functionality would likely have to be built into the OS, so its up to MS I guess. Its certainly not technically infeasbile or even all too expensive, it just boils down to be an expensive extra with the sole purpose of booting. Since most people just boot for 30 secs, and leave it on until it crashes, I dont know many people willing to pay.