I've done a "normal" install of fedora on a 64GB USB 3 sandisk stick
and it worked fine, so I imagine a bigger drive would work also
(but I can carry around the stick on my keychain :-). I set the
mount options to include noatime so it wouldn't do so much I/O
to the usb stick, but that wasn't necessary, just seemed like
a good idea.
Now I using something different. I set things up using the info
here:
https://wiki.archlinux.org/index.php/Multiboot_USB_drive
and have a bunch of different live images, several of them
specifically designed to have sysadmin and rescue tools,
and use grub2's ability to boot an iso image to boot which
ever seems most useful at the time (still on the same 64GB stick).