There are lots of programs out there that enable creation and mounting of ISO images (and other image formats as well). One of my favorites, Alcohol, requires the installation of a "fake" SCSI driver that occasionally interacts poorly with other drivers.
I ran across a wonderful ISO mounting utility directly from Microsoft! It doesn't even support adding a driver to the bootup sequence so it has no impact on startup time. It's not terribly polished - I've found that you can cause it to malfunction if you don't give it time to execute its operations - but it's free, extremely compact and comes directly from The Source (Microsoft). It's called the Virtual CDRom Control Panel (even though it doesn't really look like a control panel).