Ian, I instrumented diskimage_builder/lib/img-functions and dropped into a shell in the run_in_target() function.

I was able to positively confirm that env did in fact exist in /usr/bin/env and that is in fact one of the elements being added to path.

See below from a brief debug session.

dib-run-parts Sat Jun 24 06:20:36 EDT 2017 --------------------- END PROFILING ---------------------
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/common-functions:run_d:239 :   check_break after-extra-data bash
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/common-functions:check_break:123 :   egrep -e '(,|^)after-extra-data(,|$)' -q
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/common-functions:check_break:123 :   echo ''
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/disk-image-create:main:303 :   run_d_in_target pre-install
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/img-functions:run_d_in_target:77 :   check_element
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/common-functions:check_element:134 :   '[' -d /tmp/dib_build.P474LCge/hooks ']'
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/img-functions:run_d_in_target:80 :   '[' -d /tmp/dib_build.P474LCge/hooks/pre-install.d ']'
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/img-functions:run_d_in_target:81 :   sudo mkdir /tmp/dib_build.P474LCge/mnt/tmp/in_target.d
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/img-functions:run_d_in_target:82 :   sudo mount --bind /tmp/dib_build.P474LCge/hooks /tmp/dib_build.P474LCge/mnt/tmp/in_target.d
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/img-functions:run_d_in_target:88 :   sudo cp /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/dib-run-parts /tmp/dib_build.P474LCge/mnt/tmp/in_target.d
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/img-functions:run_d_in_target:89 :   sudo mount -o remount,ro,bind /tmp/dib_build.P474LCge/hooks /tmp/dib_build.P474LCge/mnt/tmp/in_target.d
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/img-functions:run_d_in_target:90 :   check_break before-pre-install run_in_target bash
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/common-functions:check_break:123 :   egrep -e '(,|^)before-pre-install(,|$)' -q
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/common-functions:check_break:123 :   echo ''
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/img-functions:run_d_in_target:91 :   '[' -z '' ']'
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/img-functions:run_d_in_target:91 :   in_target_arg=run_in_target
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/img-functions:run_d_in_target:92 :   trap 'check_break after-error run_in_target bash' ERR
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/img-functions:run_d_in_target:95 :   run_in_target /tmp/in_target.d/dib-run-parts /tmp/in_target.d/pre-install.d
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/img-functions:run_in_target:61 :   cmd='/tmp/in_target.d/dib-run-parts /tmp/in_target.d/pre-install.d'
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/img-functions:run_in_target:63 :   ORIG_HOME=/home/amrith
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/img-functions:run_in_target:64 :   export HOME=/root
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/img-functions:run_in_target:64 :   HOME=/root
+ /usr/local/lib/python2.7/dist-packages/diskimage_builder/lib/img-functions:run_in_target:70 :   bash
To run a command as administrator (user "root"), use "sudo <command>".
See "man sudo_root" for details.

bash: /root/.bashrc: Permission denied
amrith@amrith-virtual-machine:/home/amrith/images$ echo $TMP_MOUNT_PATH
/tmp/dib_build.P474LCge/mnt
amrith@amrith-virtual-machine:/home/amrith/images$ sudo -s
root@amrith-virtual-machine:/home/amrith/images# cd /tmp/dib_build.P474LCge/mnt
root@amrith-virtual-machine:/tmp/dib_build.P474LCge/mnt# find . -name env
./usr/bin/env
root@amrith-virtual-machine:/tmp/dib_build.P474LCge/mnt#