|Have you tried this yet? Did it work? If you've already tried it, please post your results.|
However, I dont't think it will work. It will start doing the upgrade through the network drive, but after it reboots, it still needs to find the CD and I don't think it loads network support after the reboot. If you've got a big enough hard drive, try copying the i386 folder from the CD to the hard drive. That way, after the reboot you might be able to specify the folder on the hard drive to finish installing.
Let us know what happens