Answer to first question is "No". The files expanded from a Live CD iso are mostly compressed inside one large file and therefore not bootable. The menu.lst I wrote for booting several iso from one DVD shows that booting has to be directly because the Linux are not installed but run as Live CD.

Regarding the space needed that is easy. If a distro is intalled as a Live CD, by copying the expanded iso into a partition, it will be the same size as the CD or DVD it came from originally. If the distro is installed properly as a permanent system I find 10Gb is enough for all of them except the big system like Solaris but that will refuse to boot from a USB device. I think most distros have an installed footprint between 2.5 to 3.5Gb. 5Gb per partition worked for me when I installed the 145 systems but Linux have put on weight since.

Which systems will run on a USB hdd? That I couldn't tell untill I try all of them. I thought my previous link has showed some of the systems successfully installed.

Formatting Linux partitions. MS systems do not support Linux so you can't ask any of them to create and format partition for Linux. Use a Linux Live CD instead. The strength of Linux is it has a rich command set. You have to learn it especially in multi-boot. You can get by using/learning only the commands you need at a time.

You don't need stage1.5 off Grub. Stage1 and stage2 are all I use.

You will find most if not all the essential commands needed are given in my threads. If you get stuck then ask questions.