First, I want to be clear about something. Please do not hesitate to post here any info you think is useful or interesting, even if it is also in the wiki in some similar way. Although I'm just a normal user as you are, I think this speaks for anyone related to UBCD.
My step 3 is not on the wiki at all at this point though.
I'm, guessing that between cutting and copying, cutting would save a bit of space and copying would mean that the iso was still intact, and could be copied, burned to CD, seeded on a torrent, md5sum checked to verify integrity, etc.
Please read carefully the wiki. According to it, the ISO file is not saved in the UBCD structure, but extracted to it, so actually your step 3 is not needed in the wiki.
Since I haven't tested it myself, I can't really tell you the wiki tutorial is correct or not. If it is, then it should save you a lot of space.
It's too bad a symbolic link could not be used to save space
Well, if I'm not mistaken, a symbolic link depends on the filesystem. Most USB drives used for UBCD are formatted as FAT (or alternatively used from an optical media), so *I think* a symbolic link can't be used.
But if the wiki tutorial actually works, then according to it there is no duplication of files from Puppy anyway.
If anyone can explain the different options used for grub4dos, or point me somewhere where those options are explained, I'd appreciate that. While they were listed on the wiki, they were not explained. I have several other tools to add and plenty of room on the USB stick.
Grub4dos is not something very clearly explained nor documented. That includes the "official" site moving over and over again, and more than one "tree" of developers. There are several tutorials and documents, but many of them or not up-to-date, with so many changes in grub4dos that I'd rather not leave any specific link here. I'd say it is more a "try and error" and building on experiences (from yourself and others).
The forums of each distro usually have some info about the different methods to boot that specific distro, and usually you'll find someone to help you.
As I said, under Windows you will find several different tools that make the job for you.
Personally, I'm more interested in a working booting method, and if it is clear and documented, better yet. So for most simple users, SYSLINUX is enough for booting several distros (yet, it also needs to update the documents), and you also have grub and grub2 (among others).
One popular site about booting methods is reboot.pro, but it is not the only one.