Just realised VirtualBox doesn't let you create .iso disks. but I just found another program called Virtual CD and apparently it lets you make blank .iso files.

Edit:
 Wait a second. I think RMPrepUSB will extract the iso directly to the usb and won't make a separate partition.
I'll test it and report back if it works.

Edit 2: aww, BOOTMGR is missing.

I'll try this: http://askubuntu.com/questions/397481/how-to-make-a-persistent-live-ubuntu-usb-with-more-than-4gb