I was able to successfully do a live boot from USB from an .iso image using dd utility
1. Formatted USB Drive as MS-DOS (FAT)
2. Unmounted the drive (in this case mine was disk1): diskutil umountDisk /dev/disk1
3. Using dd utility, put iso on USB Drive: sudo dd if=linux.iso of=/dev/disk1 bs=512 conv=noerror,sync
USB Drive is labeled as Windows in the Startup Manager
Boot was successful, Drivers are a different story...
Drive created on Mac OS X 10.9 (13A524d)
Test System: MacBook Air "Core i7" 1.7 13-Inch (Mid-2013/Haswell)
Distro: Kali Linux 1.0.4 amd64