There is a way to create and use a liveUSB (not CD/DVD) that is greater than the ~4GB limit.
That limit applies to the creation of the ISO file. Actually it is a limit on any individual file size within the ISO.
If the mylivecd is run with the option --noclean or --workdir, which ensures that the files used do not get deleted automatically, on a large install, then it will create the required files successfully and fail to produce an ISO.
The difference is those files (livecd.sqfs file and isolinux directory) remain available, not deleted when ISO creation fails, and they can be used by the liveUSB creator script, to produce a LiveUSB which can be very large indeed.
Personally I think it would be a very good idea to have the generation of the ISO a selectable option in mylivecd ........ just like it is in most video apps, which give the option to produce an ISO or a set of video files in directories.
In that case the required files could be produced by mylivecd without the limit of the ISO being imposed, and the files could then be used for a LiveUSB or a LiveHDD install.
In any case, for completeness, I wanted to point out the above.
So yes it is possible to produce a Live media from a large install. One just has to select the correct means to do it.