Cloning - live-only system
It is possible to use other file systems, for example NTFS for a live USB drive with Ubuntu, but you need not develop and test such systems. Instead you can simply clone from the iso file to the USB drive.
Cloning is a very reliable process and likely to succeed. The current Ubuntu iso files as well as most [but not all] major linux iso files are hybrid iso files. It means that they can be burned to DVD disks and cloned to mass storage devices (USB pendrives, HDDs, SSDs, memory cards ...) and the target devices will be bootable with a live system. The iso 9660 file system will be 'inherited' from the iso file.
You can clone from the iso file to a USB stick and use that USB stick to boot Ubuntu live and install Ubuntu into the internal drive.
dd is a cloning tool, but it is risky because it does what you tell it to do without any question. If you tell it to wipe the family pictures it will do it. A minor typing error may create chaos. You must be very careful, check and double-check that everything is correct before you press the Enter key.
Instead I recommend a tool with a final checkpoint,
in Ubuntu 16.04 LTS and newer versions: Startup Disk Creator alias
in Ubuntu 14.04 LTS and newer versions: Disks alias
in Ubuntu 12.04 LTS and newer versions and other main Ubuntu distros: mkusb
in Windows: Win32 Disk Imager
in Windows: Rufus - an extracting tool and a cloning tool
in MacOS: Unetbootin - an extracting tool (not a cloning tool)
Persistent live system
I think you can make a system boot via syslinux/extlinux in BIOS mode using NTFS, but it will be harder to make it boot in UEFI mode without an EFI system partition with the FAT file system. So if you want portability to computers that boot in UEFI mode, you need FAT (or at least things will be much easier that way). You can to make a persistent live system with mkusb and check if that will work well enough for you.
Installed system in a USB drive
An alternative is to create an installed system on the USB drive, installed like into an internal drive, but into a USB drive (pendrive, SSD, HDD ...). See this link, Boot Ubuntu from external drive. Such a system will boot via
grub, and there will normally be an
ext4 root file system. And it can be portable between computers.