Comment 272 for bug 930447

I'm reprinting what I wrote in comment #105 because it is still so very easy to install PAE, though it does require a little effort.

1) Download ISO of ubuntu flavor you wish to use, for example, xubuntu. I wil use the name xubuntu.iso, for convenience.
2) partition and format USB stick, in this example, /dev/sdb and /dev/sdb1. The USBStick has to be larger then the iso. Use mkvfat for formatting of /dev/sdb1.
3) Eject and insert the USB to have the automounter mount the USB drive. Make note of the location.
4) Use grub to install grub to the USB stick
      grub-install --no-floppy --root-directory=/media/ubuntu/2341-af31/ (obviously this will have to match the mounted path)
5) grub-mkconfig > /meda/ubuntu/2341-af31/boot/grub/grub.cfg

Open grub.cfg in your favorite editor and remove all the menuentry sections to replace it with the following.

menuentry "Xubuntu (32bit)" {
  iso_path=/xubuntu-13.10-dvd-i386.iso
  export iso_path
  search --set --file $iso_path
  loopback loop $iso_path
  root=(loop)
  configfile /grub/loopback.cfg
  loopback --delete loop
}

Save, unmount and reboot from the USB stick.

What will happen is, the USB stick will be booted as usual by grub, grub will then do a loopback mount of the iso, as is (so no modification to it required). The beauty of this all is, you can add MORE iso's and just add menu entries for them. So xubuntu 32bit, 64bit, gnomebuntu, you name it, you can add it. The only requirement is that the iso does actually support grub booting (e.g. has the /grub/loopback.cfg). Not all iso's have this!

After the installer has finished, it is required however to install fake-pae to make updates function properly, so to that extend, this bugreport is still relevant.