I think the 2GB filesize limitation is a problem with FAT32, not ext2.

If you've got a microSD card, repartiton it with GParted, leaving only 256MB as the first FAT partiton, and format the rest as ext2. Then you can use that partiton instead of an image file.

The only real advantage to the image file is that it is extremely portable. You drop it anywhere and it will work.