I successfully gzip the cde folder as cde.gz but the boot process over pxe still looking elsewhere.
Here is what I have so far:
1) extracted the vmlinuz and core.gz and placed in my c:\tftpboot\tinycore\boot\
2) edited my c:\tftpboot\pxelinux.cfg\default with:
LABEL Tiny Core
KERNEL tinycore\boot\vmlinuz
APPEND initrd=tinycore\boot\core.gz,initrd=tinycore\boot\cde.gz quiet cde
Result: Merges the core and cde into one filesystem, but drops to a prompt. Looks like it wants the cd or tftplist for cde folder. Is there a better merge point for my cde folder to work with the existing startx process like /tmp/cde or something.