You can:
- write that ISO to the stick and use it as an installer
OR
- boot that ISO and select a stick like that as the target disk
but not both at once.
16GB is enough room for a fair number of things; I have a
desktop PC here with lots of installed software where everytning
which is not /home fits in 16GB.
It will be fairly slow. A USB3 stick, if available, should be
faster, and a USB3-connected SSD quite usable in the short term.
-dsr-