How to merge squashfs file during booting of "live" linux distros from GRUB manually?

I want to boot Linux distros from GRUB 2.0 command line. I've tried to do so for couple of distros and at "best" I receive initramfs prompt, no GUI which starts if distro is run stardard way. Resulting file system seams to have files contained in initrd file (less then 100Mb), but not in filesystem.squashfs (which is larger than 1Gb). vmlinux, initrd and filesystem.squashfs files are in casper folder and linux command in menu entry in grub.cnf in distros contains boot=casper, I suspect folder name casper is not necessary for kernel option to work, casper is persistence something option related as far as I understood from wikipedia. Also as far as I understood the problem, when boot process tries to do unionfs thing it could not find SquashFS file with all except kernel distro stuff to add. How do I let it know its' location? Maybe the problem is of other root cause, please tell me so then. ADDED 0: I changed linux (hd0,msdos2)/casper/vmlinuz command adding root=UUID=what ls command gives for partition with distro and now starting, finally getting many lines stdin: Not a typewriter, then (initramfs) Unable to find a medium containing live file system and again CLI prompt. Was stdout on screen same lines as w/out root option... I just don't remember for sure, so many lines during boot. I far as understand from the GRUB manual and my try-and-error, root variable can point to device only, not path inside device, so I see setting it will not point to squashfs file inside casper folder. ADDED 1: I run grep -rnw 'initrd file loop mounted location' -e 'filesystem.squashfs' as per https://stackoverflow.com/questions/16956810/how-do-i-find-all-files-containing-specific-text-on-linux and got nothing, so have no idea how init process finds that squashfs file.