> so building a custom distribution to include, say, Magit,

I mean, you don't need to really "build" anything, you just need to install the package:

  (add-to-list 'package-archives '("melpa" . "http://melpa.org/packages/") t)
  (package-initialize)

  M-x package-refresh-contents
  M-x package-install magit

What would happen if you did that?