HOW TO: Install and Boot OS X On a Flash Drive
Remember when it was first revealed the Windows XP could be installed and booted off of a USB 
flash drive? Well, great for Windows users. What about Mac users? We were left out in the cold. If one were to search hard enough in the vast Web index that is Google, one could find just the snippets of how to boot a system from a USB drive, how to set a drive as bootable, yadda yadda yadda. Nothing guiding the way to creating a bootable installation of Mac OS X on a flash drive. I’m here to help.
Before I begin, let me say that I have been a Mac user for only two years. I made the switch, and I’ve learned enough about OS X in that time to let me do this. So, without any more small-talk, let’s get into it! HOWTO: Install and Boot OS X On a Flash Drive at Brad’s Blog