Yes it can be done: MultiBoot USB Flash Drive with real installations - not just ISO-files http://youtu.be/EqfMKvJeaB8 and written companion http://goo.gl/rX7Gyg, though Windows XP is too slow to be useful (also limited to hosts with similar hardware to the installation host's), but Linux Kubuntu seems usable and less sensitive as to hardware. Android-x86 also functions well booting on the USB-stick.
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