This method can be used with partitions on the stick that are formatted to ext filesystems. Just use the extlinux command instead of the syslinux command.
For example, if the target is /dev/sdb2 mounted at /mnt/tmp, instead of 'syslinux /dev/sdb2' use 'extlinux -i /mnt/tmp'.
One advantage here is that it seems to be easier to boot using the ldlinux.sys generated by extlinux when the target is an extended partition. Can be done if your boot record is set up for extended partitions (lilo -M /dev/sdb ext, for example), or you use an initial loader for the whole USB disk that understands them.
The directory for the configuration files is still called "syslinux" and is still created the same way.
Note: Some of the 7.1 RC releases reference the isolinux directory in their config files, so copying the isolinux/ contents to syslinux/ (then renaming files within syslinux/ as suggested) is more likely to work than renaming isolinux/ is.