As long as you dont need redbook audio capabilities, then you should look into the SHSUCDX package.

One of the programs in it is SHSUCDHD, which mounts an .iso file with a virtual dos CDROM drive driver. It can then be used with either SHSUCDX or MSCDEX.

FakeDR doesn't work with ISO files so you should use a method like SHSUCDHD/SHSUCDX.

Download SHSUCD package r3-7 from here: http://adoxa.altervista.org/shsucdx/index.html

Put all the r3-7 files into a directory like C:\DRIVERS\SHSUCD
Put your ISO file into a location like C:\ISO\

Put these lines into autoexec.bat

LH C:\DRIVERS\SHSUCD\SHSUCDHD.EXE /F:C:\ISO\image.iso
LH C:\DRIVERS\SHSUCD\SHSUCDX.COM /D:SHSU-CDH /L:D

Replace /L:D with the drive letter you want the CDROM to be, e.g. /L:D, /L:E, L/L:F.
Replace /F:C:\ISO\image.iso with the correct path to your image file e.g. /F:C:\ISO\image1.iso or /F:C:\ISO\image2.iso

Note: As mentioned software based virutal CDs in DOS are data-mode only. They cannot play audio soundtracks in redbook/CD audio format.