OK, I made a test: mounted the recovery HD, put the basesystem.dmg into the Disk Utility and burned it. After mounting the burned disk, I unplugged the Ethernet cable and double-clicked on the Lion installer. Only to get the message: installation cannot continue because you are not connected to the Internet. Case closed. With dial-up, no way to reinstall Lion with this trick even if the disk would boot the computer (did not check). The installer indeed is not full.
Might not the Internet connection be required mainly for Apple to verify that this Mac is authorized to have Lion installed?
And isn't the premise of this thread that the "install" would be deriving the bulk of its files from a backup volume? (e.g., Time Machine).
