That's a filesystem issue; you'll need to use a UNIX-like filesystem (like ext2) instead of VFAT. One option is to use GeraldKo's cloning stuff, but only go partway; that's the easy way to get all the drivers, partitioning tools, etc. at once...

And thanks for bringing that up, Steve; I had missed the bonus question. You need to add a mode= option, I think, to make executable permissions on everything; because vfat doesn't have an execute bit, it's either all files, or no files.