FINALLY figured this out by reading the excellent tidbits article. Theoretically all you have to do is restore the disk image that comes in the download from apple to a disk partition big enough to hold it. This has worked in the past, but something about the mountain lion 10.8 image breaks this. You get low level unfixable disk errors.
But if you mount the image to the finder first and then restore the mounted image rather than the .dmg file it works! Given the number of machines around here and the fact that should a disk fail I'd really like to be able to restore from a bootable disk this is quite useful.
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