This is how to build the tor-ramdisk image from scratch. It is meant as an approximate overview of the procedure so one has an understanding of its internals. It is not meant as an exact guide. Some items to keep in mind when comparing with the release images are:
I've also written an ash script which does approximately these steps, so if you need to repeatedly rebuild, you don't get tired typing. It is a bit sloppy, but functional. You can get it from the download site, here.
Let's begin...