Booting from encrypted disk image on USB drive

Question

I'd like to make a USB drive on which I can store a number of liveCDs (ubuntu installer for example).

So far, I'm able to select an ISO in Grub, and boot from it.

What I'd like to do is either:

A) encrypt the iso directly, and then have Grub mount / boot it

(or if that's not possible)

B) Create a LUKS partition as an image (let's say "partition.img"), on which there's an exfat partition containing my ubuntu.iso image

C) (least favorite option) Create a USB partition (/dev/sda1) which is encrypted, and decrypt it in Grub / mount the iso.

What I've tried:

I make a new image:
sudo dd if=/dev/zero of=/path/to/ubuntu_encrypted.img bs=1M count=5000
sudo cryptsetup luksFormat --pbkdf pbkdf2 /path/to/ubuntu_encrypted.img
sudo cryptsetup luksOpen /path/to/ubuntu_encrypted.img encryptediso
sudo mkfs.ext4 /dev/mapper/encryptediso

I then copy the ubuntu.iso image to that volume, figure out the UUID with:

sudo cryptsetup luksUUID /path/to/ubuntu_encrypted.img

This is the basis of what I've been trying to get grub to accept:

menuentry 'Ubuntu from encrypted ISO' {
    insmod part_gpt
    insmod ext2
    insmod cryptodisk
    insmod luks
    search --no-floppy --fs-uuid --set=root UUID_OF_ROOT_PARTITION
    cryptomount -u UUID_OF_ENCRYPTED_IMAGE
    set root='cryptouuid/UUID_OF_ENCRYPTED_IMAGE'
    loopback loop (cryptouuid/UUID_OF_ENCRYPTED_IMAGE)
    linux (loop)/casper/vmlinuz boot=casper iso-scan/filename=/path/to/ubuntu_encrypted.img quiet splash ---
    initrd (loop)/casper/initrd
}

But, so far, no dice. Is what I'm attempting to do impossible?