Building a Live CD
Motivation - Why?
Having a bootable version of Arch Linux running totally off of a CD is useful in many ways. It can be used to rescue your system, test new machines and check if the hardware is Linux compatible, keep an updated installer with the latest packages, make a demo CD to show your projects, and much more.
Instructions - How
There are currently two well-developed and documented tools available for creating your own Arch Linux-based live media: Archiso and larch. Please refer to the respective articles for detailed information, because this article will only give you a rough overview.
1. step one - determine what you want the CD to do, and what programs and specificity what DE/WM you want running. Read this Beginner's Guide
Then read this Start X at Boot then find a tool that works for you, see next section
Archiso is the official tool used to build Arch Linux release images. It strongly follows the KISS principle and is easy to use. If you want to build your own updated Arch Linux live installation images, this tool will get you to your goal quickly, as the git repo contains the exact profile used to generate these installation images. However, it can also be used for completely customizing your live medium. It relies on an Arch Linux host system.
larch aims to provide a more desktop-based approach. It does not require an Arch Linux host system.
It's a very simple live CD creator. It uses just a Makefile to build live CD images, and uses pacman to install base and additional packages to the live CD. You can choose your packages and build them into a live CD. Moreover, this uses GRUB to boot the live CD in order to add more flexibility. This means it's much easier to make a live USB stick without formating it. For that, you just need to install GRUB into your USB pen drive and copy the files in the ISO to your root directory in the pen drive. It relies on an Arch Linux host system and pacman.
This is available in aur
Avalable in aur, uses zenkernel and linux-live scripts (from slackware/slax fame). Currently out of date, but it does show another alternative method of remastering for your consideration.
More information about it in it's announcement thread.
Contained in the AUR  has aufs among other things, making it an option for live CDs
NOTE AS KERNEL 2.6.39, the vanilla kernel no longer supports aufs making a custom kernel a neccesity.