Need to reinstall OS X from scratch? Current install dead and only have a Windows machine handy? There may still be hope!
Reported to work as of 2013-08-19:
Use TransMac. 15-day trial period and works flawlessly. In the left pane, right click USB Drive >> Format Disk >> Format with Disk Image (see attached screenshot). Point to your .dmg file and click Open.
It will take a few minutes depending on size of .dmg and speed of USB drive, but once done you can pop it into your mac, hold down the option key when turning on the mac and choose the USB drive.