The following information is based on OpenSuse 11.1 and might fit as well to 11.2
Motivation:
We had problems using the OpenSuse 11.1 base DVD ISO image for installation so we where forced to have the update repository available during installation.
Since a update repsotory is not stable in terms of software release number each new installation might differ to a previous run and requires internet access as well.
To aviod this problem we decided to mirror the Update repository ( only required parts of course ) to the local installation server.
Our local directory is /export/mirror/frozen/ftp5.gwdg.de/pub/opensuse/update/11.1
To enable autoyast to use this repository an add_on_products.xml has been created within the 32bit installation repository:
Example:
$ cat /export/suse/sl111/x86/add_on_products.xml
<?xml version="1.0"?>