Yes, (most) liveCDs make a ramdisk, but this is really just for dynamic files that linux ordinarily expects to be able to write to in the process of basic system operation. But the filesystem should use /proc/mounts -- which is in the virtual /proc filesystem already, anyway (and therefore won't be a problem for liveCDs) -- when mapping a directory to a device (or not mapping it).
Slightly off-topic here, but a nifty idea that some liveCDs use is unionfs, a kernel patch that allows you (among other things) to have an "override" folder; it's difficult to describe without an example: you have two existing, physical directories /foo and /home/userbar/baz. You mount /foo readonly and /home/userbar/baz as read-write, "on top" of /foo, as as /media/union. Now when you look into /media/union, what you see are the contents of both /foo and /home/userbar/baz. If there should be a file that exists on both, the "higher" mount (in this case /home/userbar/baz; you remember what I said about "on top"?) takes precedence. When writing to /media/union, you write to a branch that is loaded read-write, in this case /home/usrbar/baz, in this way /foo is not modified at all.
One of the beautiful things you can do with this is take an entire filesystem, make a small ramdisk and mount it under /media/union, mount a compact-flash card, and unionfs-mount your filesystem read-only, the compact-flash read-write, and then chroot or pivot_root into /media/union. In doing so we achieve a read-only filesystem where the sum of all changes since its creation are stored on the external CF card, ideal for liveCDs. In fact there are some liveCDs that use this concept already, slax is one IIRC.