Apple packages an elegant little USB key with its MacBook Airs that allows you to restore Snow Leopard if your machine goes south. But with many people upgrading to Lion, few will want to go through the process of downgrading to Snow Leopard and again to Lion if the machine goes bad.
Here is a way to upgrade your USB Key to Lion as well as your MacBook Air.
MacBenTosh has posted (thanks, Danny!) a video guide showing how to format the restore key into a drive that works like a normal 8GB rewritable Flash drive. To follow along with the instructions in the video you’ll need an instance of Windows running in a virtual machine, Boot Camp or a separate PC. After restoring, the key will be shown as a 8GB drive.
From that point, Egg Freckles has posted a guide on how to create a Lion disc. Of course Lion will only be available from the App Store (or Dev site), but it’s nice to have a local, external installer.