As someone who is currently undergoing a LFS install into a VirtualBox VM, I can confirm that the use of a live environment (live-CD, or what-have you) works perfectly. I am currently building my LFS under the Linux Mint 11 x86 gnome CD. As for the build itself - wheeee!

My taste buds tell me they all taste pretty much the same. My opinion of all beers thus far is this - "put it back into the horse it came out of."

With the understanding that I have no knowledge of this language outside of it's name... How about Haskell? :P