wearing level

If you copy everything to the host's computer hard drive (assuming you have the rights to do so) and run everything from there, then clean up afterwards, you are risking a lot of privacy and security.

The process could crash and leave sensitive data on the host computer.
The process could be terminated incorrectly (pull the USB drive) and leave data.
The deletion of the data might not be complete and could permit recovery of sensitive data.
The deletion could complete but someone follows and un-deletes the data and takes it.
The updating of the USB data might not work correctly and could corrupt the data on the USB stick.

And it goes on and on.

You should probably follow the recommendations about disabling the cache and other things that are listed on the FirefoxPortable pages on this site. Those recommendations will minimize the writing cycles. You should also evaluate all of the geegaws and doodads you are running (themes, extensions, addons, etc) and eliminate any that you don't absolutely need, since they probably affect the read/write cycles, too.

Lastly, exactly how many write cycles are your particular drives rated for? And how long does that really mean? For instance, if the drive can tolerate all the stuff you throw at it for 4-5 years, do you really think you'll still have the drive for that long without losing it or replacing it with a bigger, faster, better drive?

The portable FF should not use cache in fact, it was always disabled on my one after installation. The problem using cache is that as you say it has to write it somewhere, and doing that to the flash takes looong time and makes the ff slow, and fills the stick with probably not needed data. If cache is off, then it writes only its history file, this is not so big and can be switched off as well if you want.

Modern flash chips are good for 100,000 erase cycles (some for over a million)

The USB spec rates USB2 type A connectors (normal USB connectors) as being good for 1,500 insert / remove cycles.

Doing the maths, that means that unless you re-write to a given cell an average of 60 times every single time you use the drive, then the connector will break before the flash wears out.

I've never seen a flash drive wear out its cells, but I have two here on my desk with broken connectors.

People are concerned someone might get your "personal information"
from the hosts temp-dir (perfectly reasonable concern btw) ??
But yet, despite you distrusting the host,
you insert your flash-drive in said host ???

I think that if the user considers the host safe enough to even use, it is also safe enough to use it's temp-dir .. If some evildoer can access the temp-dir afterwards he's likely in a position to do things much worse, like dumping selected file-types, the entire content of your drive etc etc ...

Wear-leveling ??
A nice fix, created to allow the use of cheap inferior MLC-NAND in areas where it objectively has no place.
I have 2 drives with the same controller, one has MLC-NAND, the other SLC-NAND and it's about 5 times faster at starting FF .. It also cost me 5 times more, so ...

Edit :
Please point me to the manufacturer who guarantees 100.000 erase-cycles
for their MLC without using their wear-levelling algorithm ?
The amount of reserved NAND some SSD-manufacturers allocate indicates that
cells going bad IS a real concern .

http://www.uwe-sieber.de/usbstick_e.html
"But actually NTFS isn't suitable for flash medias because as journalling file system it has some overhead that wears out flash memory. But Windows XP optimizes and bundles write accesses to pen drives only when they are NTFS formatted, so I see NTFS as the right choice."
http://ask-leo.com/can_a_usb_thumbdrive_wear_out.html
"Let me put it this way: I strongly recommend that you backup the contents of that drive - also sooner rather than later." Once a week would be fine with portable apps backup.
http://ask-leo.com/should_i_defragment_my_usb_flash_drive.html
"..Flash devices (or any "solid state" devices) don't gain a performance benefit from being defragmented.
But in reality things get worse. Much, much worse.
You should never defragment a flash drive.
Writing to flash memory causes it to degrade ever so slightly. (Reading does not.) The more you write to a flash device the shorter its lifespan will be."
Do not defragment never!!!!
http://ask-leo.com/how_do_i_fix_bad_sectors_on_a_flash_drive.html
"Unfortunately tools like chkdsk, scandisk and the like are unreliable when it comes to scanning flash drives for what on a hard disk would be called a "surface error". Flash drives aren't hard drives, and don't live, or die, by the same rules."
Wearing out makes bad sectors. Hence: buy a new one. Use programms with less writing.