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Pretty much any halfway decent provider can mount a custom ISO for you. You just supply a link to the ISO file, so if you're creating your own ISO just throw it on a webserver.
There's another way to do it that involves using pxe, but someone else will need to explain that one.
I noticed first-root (in Germany) has netboot.xyz as an ISO option, could be useful for what you want to do.
Also just checked, so does InceptionHosting (in the UK, and elsewhere)
EDIT2:
But it is LunaNode that's got exactly what you want, directly available in the "Images" section of their control panel - upload your ISO image and you're off to the races. They offer VPS in France (and Canada, but I understand you're looking for EU location). Billed hourly, all around excellent system.
I'll have a look at Lunanode - I noticed them earlier in the threads here. PXE would work too, though I have no idea how flexible VPS providers are these days
I think you'll find many (but definitely not all) hosts on LET willing and able to accommodate reasonable requests - though if you have to open a ticket every time for repeated tests, that's probably not optimal for you or them.
Lunanode is one of the few that I've found (and the only one I can think of at the moment) that is set up to handle the ISO upload automatically. And they are a high quality service in general. And they're in your budget: $5 gets you in the door - seems like the closest match to your specs they're offering in France with 2 cores comes with 1 GB ram and 20 GB disk for $0.0072 per hour, which would be $5.18 if you ran it continuously for a month. If you "shelve" the VPS when you shut it down then you get billed only for storage space and IP address while it's off, something like $1.50 a month approximately, depending on storage size. Pretty nice deal, all things considered.
+1 for Lunanode.
dd if=netboot.xyz.iso of=/dev/sda