Can a directory in Linux partition be used instead of a persistent image?

[rajibando]

Many of the Linux distributions use persistent images each, such as pendrivelinux or Knoppix.
Pendrive linux goes a step further to create and extend an EFS on the fly!
Is it possible to use a separate directory instead of the persistent image, to achieve the same goals?
My HDDs are ext4, but persistent images are ext2, meaning data during accidental power cut can't be recovered.
How can I use a directory + partition for persistence across multiple boots?