I found this interesting page which explains the El Torito specification and is quite adamant that the Win98 CD Rom IS bootable.
*www.buildorbuy.org/cdbootmenu.html
The following page, however, indicates that further steps are required as you have stated:
*www.heise.de/ct/Service/English.htm/99/11/206/
but also gives some other methods of performing an installation from DOS.
Microsoft obviously assume that a bootable CD Rom should be a replica of your hard drive !!!
*support.microsoft.com/default.aspx?scid=kb;EN-US;q167685
Based of what I've read and tried (from many sites), and assuming your pc's can boot from a CD, the boot CD drive can't be larger than a floppy (if you want to retain the Win98 CD image as it originally was). To access additional (non-bootable, Win98) info on the CD, you have to have the proper CD driver(s) loaded during boot, and know what drive letter has been assigned to that area to run stuff there. You'll also need to know what drive letter has been assigned to the HD partition that you want to format/install on.
1) try the links i Have mentioned above
2) I'd recommend using Win98 as your boot image (make a floppy with everything you need on it, and use something like Nero to create the CD).
Hope that helps!