Based on my test with a USB drive, you can format it with a disk utility. Since I have Snow Leopard (no HFS format/write support), I had to use TransMac via WinXP, which is really maddening. If someone knows of a similar Mac based tool, please chime in. I was then able to open the drive in Basilisk and transfer files to the drive. Once I get my CF card, I will try the same thing.
This thread helped get me going: http://68kmla.org/forums/viewtopic.php?f=15&t=11290.