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I think the reason we haven't heard many complaints about the doing away of physical media is exactly this. As long as power users can make their own offline media, there's nothing to complain about.

The CDROM image was a firmware upgrade image from Dell (based on Linux). Mounting the image with iDRAC, it worked nicely. As one of the Servers had a dying iDRAC (Dell R320), I needed an USB stick.

Update: Before you try all of this, you may want to try using WinToFlash, a utility designed to create a bootable Windows flash drive for Windows XP/Vista/7/Server. If this works for you, you can skip ...