For pointing this out to me first. After fruitless hours messing around with older techniques and gui programs suited for installing Ubuntu FROM a USB drive, this simple on liner gets it done.
Assuming that /dev/sdb is the device for your USB stick and ubuntoblah.iso is an iso install image, then:
sudo kvm -m 512 -hdb /dev/sdb -boot d -cdrom ubuntublah.iso
And install as normal.