@ secdroid.

I have formatted a 4 Gb usb as a single partition
of Fat32 with GParted, using a Knoppix 6.7 CD.
Then, also using the LiveCD, made a LiveUSB, allowing
2 GB for persistent store, and allowing grub to be
installed to the MBR of the USB.

This leaves about 1Gb unassigned on the USB for whatever
use I might make of it.
It leaves my computer's MBR unchanged;
I select USB from among the media boot choices already
available on my computer's boot program, whatever it is.

Works for me, and I don't know a simpler way.

If you are trying to install to a 1 Gb partition,
I don't think you will have enough room for any significant
persistent store. 2 Gb will work well enough, except don't
try a full upgrade of all programs.