I tried the USB flash drive boot of 10.5.6 according to the web site:
http://blog.bradbergeron.com/2006/11/howto-install-and-boot-os-x-on-a-flash-drive/
Of course with some modifications based on the comments. It kind of worked. However, the Finder did not launch once I booted from my USB drive. I couldn't see any mounting HD or booting drive on the upper right, and not able to get access of the file system. However, I was able to use some applications in the Dock, such as Preferences, etc.
I did the stripped down install in order to fit the 8GB drive (with the purpose of possible to "Boot Camp" it with another small XP partition in case it works!

), so I am pretty sure I might missed some files for the Finder to work. I only installed the essential and additional essential as well as Safari with Pacifist.
During Option rebooting, I could select the flash drive, and it went through the Start up process for the first time (over 5 min) to get to all the register stuff, and finally brought up the menu bar goodies, such as Clock, and Time Machine icons and the Dock at the bottom (with couple of question marks since I did not install Mail, etc.) However, the Finder desktop never showed up. I think I might forgot to install some component for Finder, but not sure which part I should add. Any suggestions?
PS. I do see this valuable for MBA. Since you don't have access to a Super Drive everywhere, a small UBB flash can help in terms of emergency repair (assume we can get it to work!).