On Tue, Aug 30, 2011 at 15:22:21 -0700,
  John Reiser <jrei...@bitwagon.com> wrote:
> > It would be nice to get rid of the embedded ext4 image now that squashfs
> > supports special files and extended attributes (needed for selinuix labels),
> > but there are some other roadblocks that will block that change for the near
> > future.
> 
> Where is this issue being tracked?

Here is the closed bug:
https://bugzilla.redhat.com/show_bug.cgi?id=623707

It doesn't go into much detail, but the issue seems to be that squashfs
doesn't work with writeable overlays.
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