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You should not need to disable or put the System into permissive mode to build a livecd. Do you have a bug report for this.

You should run with targeted policy since this is the most used. minimum, is just for people who want to experiment with SELinux.

SELinux is not a service, it is the way the kernel is configured and the way the system is labeled. Disabling SELinux requires a reboot. You can put the machine into permissive mode by executing setenforce 0.

Read danwalsh.livejournal.com for lots of Info on SELinux.

I would recommend you google for SELinux info using site:danwalsh.livejournal.com