With limited USB ports (just 2) and no CD-ROM/DVD-ROM bay, is there a way I can boot off an ISO image stored on a Windows partition? I would like to use the ISO as a live CD and without the use of virtualization.
You may be able to boot from the "content" of the ISO image, but usually not the ISO itself.
I am not sure about the low level operations, but it is possible for a bootloader to emulate an optical drive with the ISO image based on some BIOS interrupts, but at some point of booting, the kernel entering protected mode or a kernel mode optical drive driver kicking in will render it useless and the booting will stop as the driver fails to find the "virtual optical drive" and mount the root filesystem. There may be ways to make it work, but probably not worth the effort if there is alternatives... shown below.
What you can do instead:
There are numerous tools that allow creating a live USB using the ISO image of Linux/*BSD/... live CD, one of them is UNetbootin. (I mentioned this just because I only remember this at the moment.) You can then boot the "live CD" with the USB flash drive.
It is also possible to manually extract the files from the ISO, install a custom bootloader (e.g. grub2, syslinux) and boot the "live CD" directly, but this is far more advanced and can easily mess up your computer if done incorrectly, so I suggest you simply make a live USB.
There is also a possible way to boot from an ISO image, but this is not guaranteed to work for every live CDs... You can use EasyBCD to add a boot entry which will boot from an ISO image. It provides a free version for personal non-commercial use.
Grub2 boot loader should be able to do this ... Take a look at http://ubuntuforums.org/showthread.php?t=1549847