I had no issues with this in 15.04 or 15.10, so I suspect this is new to 16.04.
I have frequently used the Universal USB Installer to create Live USBs with a casper-rw file for persistence. Once two of them are made, I boot to one, plug in the other, and resize the 2nd to make room for a casper-rw partition larger than 4gb. Then I delete the casper-rw file in the primary installation partition. This then allows the Live USB to have larger than 4gb persistent storage.
I have performed this successfully a great many times with Ubuntu 15.04 and 15.10.
That said, when I do this with 16.04 it breaks the Live installation. It will no longer boot. Has the process changed?