I used that type of configuration. I installed Windows8 on a USB3 stick and also on a USB3 disk. Then I changed the BIOS boot sequence to boot first from USB3. When the stick or the USB3 disk were plugged in, it would load into Windows8. When they were not plugged in, the system would load from my internal disk which had Windows7.
Here is how I made the installation on the stick and on the USB3 disk:
http://www.eightforums.com/tutorials/5349-windows-8-go-setup-usb-flash-drive-usb-disk.html
Just a note of caution. If you only have USB2 material, it is quasi impossible to make that operate. It will work like molasses. USB2 is just too slow.
I can quasi disagree on the last point
The Windows 8 CP was too slow, but I have the
RP running acceptably fast on a Sandisk Cruzer 16GB thumbdrive (USB 2.0) So far it has been fine on my netbook (Packard Bell dot se with Intel Atom N450 1.66GHz and 2 GB RAM, Integrated Intel Graphics Media Accelerator 3150), and my old Acer Travelmate 2340 - Intel Celeron M 1.50 GHz, 2GB RAM, Mobile Intel® 915 and 910GML Express Chipset Family. - so the hardware is not formula one either.
On the Packard Bell,the RP found and installed the Windows 8 Intel GMA 3150 driver, on the Acer, a generic VGA driver only, but working at full resolution for an attached 1440x900 LCD monitor with acceptable quality. Neither has stability problems. The Acer is so old, it does not even boot natively from USB - It has Plop Boot Manager to enable USB booting!*
So far the OS has 6.7 GB used on the stick, it shuts down & restarts to desktop in about one minute.
One way I have had "Windows 7" ("To Go") booting and running from USB was using a Windows Embedded Standard 7 SP1 built OS with the USB boot feature and enhanced and file-based write filters, using the HORM feature, which seems to be like hybrid boot. That can run, at a slow speed similar to the CP, from a 4GB SD card! In a USB card-reader, that booted and ran on the Packard Bell dot se, an Acer Aspire 7520 and an Acer Extensa 4220. To all intents and purposes it did everything Windows 7 does.
The OP may find Plop Boot Manager useful to add a boot from USB option to the boot menu too.
Plop - Home Ithink it can be found via EasyBCD too.