Should the 300MB recovery partition be considered a way to boot winRE without depending on C: ?
Found a reliable source indicating the recommended/default 8.1 upgrade using the downloaded setup.exe should be using the 300MB recovery partition. see the Hard Drive Partitions section at bottom of Windows Recovery Environment (Windows RE) Overview
Regardless of boot mode there is a use for these phantom recovery partitions the question is; "why is windows not using them?"
What is missing from the created ISO that stops winRE from being installed to recovery partition when using installation media?

I opened a new thread How To Fix Broken Recovery Options after 8.1 Upgrade.