[Grml] Boot from iso option not working with grub2

[Theodotos Andreou]

Guys I want to have a grml small iso under the /boot/iso partition in
Debian 6.0 with Grub2. My config in /boot/grub/grub.cfg is:

menuentry 'grml' {
    insmod part_msdos
    insmod ext2
    set root=(hd0,msdos1)
    search --no-floppy --fs-uuid --set <uuid>
    echo 'Loading GRML Small'
    loopback loop (hd0,0)/iso/grml-small_2010.04.iso
    echo 'Loading Kernel'
    linux (loop)/boot/grmlsmall/linux26 boot=live vga=791 noeject noprompt
    echo 'Loading ramdisk'
    initrd (loop)/boot/grmlsmall/initrd.gz
}

When I boot I get:

"error: cannot read the Linux header"

Any idea what am i doing wrong?

Theo