The image you've produced was slightly larger than the original, so I had errors writing to my old and cheap 2GB USB stick.
That's odd - it's the same image file, just edited - I wouldn't have thought it could increase in size. However I was testing it on an 8Gb stick so wouldn't have noticed.
I set the stay awake option and all was fine. But I use a mouse and keyboard on it, so even if the touch screen turns off, I'm guessing it wont be an issue.
I'd be interested to know if you can wake it using the mouse/keyboard once it goes to sleep properly (not just screen dim) - I've been playing with cstate settings without success so far. However, the 'stay awake' workaround doesn't seem to be that much of a problem.
One issue I've had, and I seem to recall this being a general issue with v4 upwards on android, is using the ethernet port. It doesn't work by plugging the cable in, and I can't see any options in the setting for a wired network.
I can't remember which thread I saw it in, but you can apparently get wired networking going manually, through the console and using ifconfig-type commands. I think the Play Store doesn't play nicely with it though.