Nerdpedes,
have a look at
https://security.stackexchange.com/questions/64915/what-are-the-biggest-security-concerns-on-pxe
Best of:
I can capture a full machine image. Do your systems automatically connect to the domain controller after setting up the machine? If so, this image probably has domain controller credentials on it, that I can capture and use elsewhere.
Computer makes a DHCP request --> DHCP server responds with address and PXE parameters --> Computer downloads boot image using TFTP over UDP
If the good guys got the traffic on that low level, unencrypted. Then they would have it all.
I see what you are saying, I just don't know if it's possible to 'stream' an OS like that. Modern OSs are generally large and complex. The way this would work could be potentially a thin client or similar, but then we are talking about terminal services rather than PXE.