I'm not trying to say "you shouldn't do that", but I don't see the point of installing an ISO, hybrid or otherwise, to a USB stick - or for that matter of using an installer.
coreplayer's procedure seems similar to mine except for differences that no doubt derive from his different circumstances/requirements.
I don't generally wipe a stick with dd unless it is giving me trouble.
partition is (fdisk)
format it (with label) (mke2fs)
install bootloader (grub4dos)
copy the kernel and initrd (I generally use the stock ones from the web site)
set up the tce directory (mine's little complex, but most of it just gets copied over from the running system)
I've only dabbled a little with remastering so I'm no authority, but doesn't the process produce an initrd that you can just grab and use?
No ISO involved. No installer involved either - though if I were doing it from a running MS Windows system it might be a different matter.
As coreplayer2 said, "kinda complex but works every time".