Quick answer = yes , how = tricky as you have to fake the dvd or install from the mini / cd version onto it then it should be okay.
Here is some stuff I have been looking at for USB thumb / stick drive.
http://www.sabayonlinux.org/forum/viewt ... =usb+thumb
The cd / 700mb 3.4e will be out in 14 days might be able to play with it from there. I would try this but smallest = 160gb usb hd and installing to usb hd is normal / same as internal hd.
This link should give you a few ideas.