Actually, I had already used qemu-kvm to create flash directly, I just forgot about it, see http://knoppix.net/forum/threads/293...or-root-device post #10. (It runs best in 64-bits system, and I haven't used that since remastering 6.7.0.

Code:
# lsusb Bus 002 Device 006: ID 0951:1624 Kingston Technology  ..... 
#qemu  -cdrom /store/download/iso/KNOPPIX_V6.7.0DVD-2011-08-01-EN.iso -hda  /store/vm/qemu/knx670_disk.img -m 1024 -boot d -usb -usbdevice  host:0951:1624 &
Then "Install Knoppix to flash disk" can be used in the virtual machine.

I think anything below 8GB (good brands cost from about $10) is rather impractical for Flash Knoppix 7.X. But masochism is of course an option