I've noticed that the etc/make.conf file in the livecd-stage1 creation process isn't saved with the USE flags set in the livecd-stage1 spec file. This means that when you create livecd-stage2 there are no custom use flags set. Can the use flags used for livecd-stage1 be written to the etc/make.conf file for that stage? Or is there some way to tell livecd-stage2 what use flags it should be using?
Yeah, check the documentation. boot/kernel/$kname/use is how you set it.