The current fuel iso build system is building a Ubuntu mirror using packages downloaded by the wget as well as packages copied from the /var/apt/cache directory. These are remaining of the 'multistrap' utility that is used to build a base system.
Because the 'multistrap' utility is not instructed to use extra repositories supplied using the 'EXTRA_DEB_REPOS' no base-system upgrades are to be included during the base system installation. This leads either to a) old base-system packages or b) duplicates of base-system packages present in repository on the ISO image.
To fix that it is necessary to instruct the 'multistrap' utility to use user-supplied repositories specified in the 'EXTRA_DEB_REPOS' to build base-system by updating 'multistrap.conf' configuration file appropriately.
It was discovered that the patch for bug is making it impossible to use a general repository other than OSCI-VM repo.