According to Johnny:
when using RPM to install centos-release initially ... use the --root function like this:
rpm -ivh --root $LIVE centos-release
This trick, immediately followed by the "yum -c $LIVE/etc/yum.conf --installroot=$LIVE install yum" stanza, seems to work for me on an up-to-date Centos 4.3 system. I am still in the process of yumming the rest of the system in... Thank you lots everyone