To me, it seems that rather few people use Qemu/kvm as a tool for handling Knoppix. Both for testing and running images, to avoid the CD/DVD burning step, and a lot of other things. Here, I will just tell how I used it to create a plain flash install og 7.4.2 very easily. Basically the same story I have told before, but now it is 7.4.2. I did this on a Knoppix 7.0.5 install.

Download and check the ISO image, insert the USB stick to install on in a USB (preferably USB3.0) port.
Then check qemu/kvm-modules are in place, and find out what the drive is called

 $sudo modprobe kvm && modprobe kvm-intel
 $fdisk -l
Log into the download directory and run the DVD image in qemu with kvm acceleration. Here, the stick has been mapped as /dev/sdc, I run with 1GB memory, and boot the image

 $sudo qemu -machine accel=kvm -cdrom KNOPPIX_V7.4.2DVD-2014-09-28-EN.iso -hdb /dev/sdc -m 1024 -boot d
A small window with the Knoppix boot prompt opens - here you can enter kernel and keyboard options etc. Then a somewhat larger window where Knoppix runs, apperars. You can use this to check different aspects of the new version.
Then click the Install Knoppix to flash icon. Beware of the pecularity occurring next: You must choose install to hard disk, because when starting the virtual machine with the -hdb /dev/sdc parameter, the USB stick has been mapped to /dev/sda. You will be able to check it from the size of the drive.

You have the ordinary choices - I recommend to start with the simplest procedure: Let Knoppix format the whole drive as FAT32, use a 4GB overlay file (not partition) if the stick allows it.
For me, this worked very well on the first try. I immediately used the stick to boot another PC where the whole disk was to wiped out and setup anew for a new install.