Filesystems other than UDF and ISO9660 on CDs, DVDs, and Blu-ray

I know for a fact, that Live CD versions of distros like Arch Linux, Debian, Fedora, Gentoo Linux, Salix, Ubuntu and on embedded distributions such as the OpenWrt and DD-WRT router firmware use [SquashFS]. But I was convinced, that optical media is practically bound to ISO9660 or UDF. I was thinking, that it might be a good idea to use SquashFS for recovery partitions, as it works well on hard drives as well. Another idea I had was: how about using it on other optical media? Most CD/DVD/BD-R is WORM anyway, so using SquashFS should be a step forward, given the transparent compression and all. I don't know if that would actually work though. How do those non-UDF/ISO9660 filesystems on optical media work? Does it work anywhere else as well?