I looked into this and I would like to suggest that we use the patch in my debian-cd branch. I remastered the alternate CD to have a Release file without the uncompressed Packages file (those are missing on the CD now too) and it installed just fine.
Fixing it inside update-manager would mean that we would have to backport the fix into libapt and add that to the CD as a prerequisites (more pain).
I looked into this and I would like to suggest that we use the patch in my debian-cd branch. I remastered the alternate CD to have a Release file without the uncompressed Packages file (those are missing on the CD now too) and it installed just fine.
Fixing it inside update-manager would mean that we would have to backport the fix into libapt and add that to the CD as a prerequisites (more pain).