I run a linux destro on my laptop via USB hard drive - I just installed the thing to the external drive and let GRUB be the boot loader. Only problem is that I need the hard drive to boot the laptop, but I always have them both together.
I have tried guides to making USB devices bootable, and all the ones I have read, quite frankly, suck. It is basically a guess-and-check process - every computer and device is different, so you have to fiddle to get it to work. Just depends on your needs, your options, and your computer setup.