A VM is really the only way I can think of running an OS within another OS. Because these aren't applications you won't be able to 'overlay' a Linux distro on to another. Even something like Puppy Linux that runs entirely in RAM, will require you to boot into Puppy and you won't be able to switch between distros without a reboot. Even bootloaders like GRUB are transferred control at boot from the MBR so you won't be able to run a distro without booting into it in some form, which will not give you the ability to transfer control to your original distro.
A VM like Virtual box is the best way to accomplish what you're trying to do, but if you don't want to go that route you can always dual boot.
Is there a specific reason you want to run two distros at the same time?
