I noticed a possible explanation for the "Stuck at 5 seconds remaining" issue. It's not the filesystem of the USB stick, it's Windows 7's way of copying files. One can watch what happens on the Task manager, Performance tab, Physical memory Usage graph.
A file being copied gets buffered into memory as it gets written to the destination drive. The whole file buffers through the memory. With a large file, one can see the memory usage go up substantially as the file gets buffered into memory during the copy process, then tail off back to normal as the file finishes copying.
The "Time Remaining" progress bar in the File Copy window seems to be tied to the reading of the file at the source, not the writing of the file to the destination. So the progress bar will move across as the file is read into memory and the memory usage goes up. When the whole file has been read, the progress bar will read "5 seconds remaining". But the large amount of memory still being used by the buffered file contents is still waiting to write to the destination, and the progress bar gets "stuck". One can watch the memory usage drop down back to normal in Task Manager, then the progress bar and the copy window will finish.
If the progress bar were tied to the destination write process, it would show accurate times.