First, by default FUSE – which curlftpfs is based on – denies access to all other users, even to root, for security reasons. This has to be disabled using -o allow_root.
Second, mounting a filesystem requires support for random access to any part of the file. FTP does not support this properly (although there are extensions), and curlftpfs does not seem to support such extensions at all – it will RETR the entire file even if only a few bytes are desired. Because of this, mounting disk images over FTP is pretty much impossible.