It use to be a ramdrive, but a initramfs is current tech. ( you know this already...)
As you said hiro, links, in this case to dirs. on the HD, not the file: mydata.tgz.
A very different setup than TC, the Squash file is linked into and not used directly.
Loose links and dirs. are made in ram or copied to ram from the Squash file.
/ dirs. in ram: /dev, /mnt, /proc, /sys, /tmp , the rest are links to the Squash and HD.
Config. files and the like are on the HD, apps. are in other Squash files same as TC.
Most OS files aren`t written to and some are, this setup puts the rw files on the HD.
This setup uses 1/3 the ram of TC`s all loose files in ram ( kernel not included ).
It`s only a savings of 17 MB or so. Not much. But running a Squash file is secure.
An item I neglected to mention, the Linux kernel won`t boot with a Squash file.
To my knowledge it only uses image files and cpio files for booting. ( wrong? )
So to make this idea complete would require modifying the kernel. No small task!
But a Squash file can be put inside an image or cpio file, and the tools to boot it.
Tools needed are the mount command and a dir. mount point, and it`s good to go.
NOTE: The kernel could mount a Squash file at bootup on it`s own.
It only needs internal boot code to do it, the kernel can mount and make dirs.,
and it has the Squash driver in it, I don`t think it needs any external libraries.
So a new bootup method should be added to the kernel`s existing 3. ( I think 3 )