This is the way we do it currently. The OS and each application is installed as a separate module in the image. We are looking at several software packages that handle modular imaging in different ways in addition to evaluating our current tool, PC-RDist. Everytime the machine is updated, a new image file is made and distributed to all machines.
Ghost is an example of a cloning tool.
The host OS does not have to be the same as the guest OS, and the guest OS is presented with identical virtual hardware regardless of the actual physical hardware the host OS is running on. VMWare is the tool we are evaluating for this method.