Scott M. Johnson, a Program Manager in the Windows Storage Server team, has just published a new blog post that might give you some ideas on different ways to use the Microsoft iSCSI Software Target. He outlines six different uses for it:

1) Consolidate storage for multiple application servers.
2) Test and Development scenarios are endless, especially for Clustering, Live Migration, SAN transfer and Storage Manager for SANs.
3) Setup an iSCSI SAN for a Windows cluster.
4) Consolidate servers into Hyper-V VMs and migrate the data to a Windows Storage Server. 
5) Diskless SAN boot over iSCSI!
6)  “Bonus storage” for people in your organization. Storage Administrators can be a hero! (for once).

See the full post (with lots of details and diagrams) at:
http://blogs.technet.com/storageserver/archive/2009/12/11/six-uses-for-the-microsoft-iscsi-software-target.aspx