Why don't you boot up your choice of Linux and when you install it to the USB leave some space unpartitioned and later use GPARTED or similar to create that FAT32 partition and format it?
I'm guessing you want others to do this, write a blog and more?
I know this is a subject that has been constantly rehashed, but there's still a few things that I'm unclear on. I'd like to create a bootable partition on my 8gb usb flash drive, but still keep another partition for regular flash drive use. How would I go about accomplishing such an objective? I know there are many utilities out there, but I'm unsure how to go about doing this. Basically, I want one partition that will boot Linux, and another partition that Windows will recognize as a regular, removable drive, for regular flash drive purposes. Not sure if that specific objective is even realizable (difficult to have a drive w/ both removable and fixed partitions?) but I'd just like some advice to help clear up some of the uncertainties I have about this. Any help would be very much appreciated.