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Some help with dd backing up into an iso

I am not very confident I am doing this right and it seems wrong,  I
can't locate any documentation that results into proper options.
I tried backing up an 8gb USB that has 2 partitions in it, one had 1.7gb
of data on it.
I used dd if=/dev/sdb of=usbfilename.iso
The resulting image was the full size of the disk.
To test the validity I restored reversing the order of the filenames
if/of  but that took for ever and it was a hog on resources.  After a
while I just gave up and killed the process.  I looked at the disk and
it seemed complete with all files in tact, so maybe I killed it
somewhere in the verification process.
So I used a program called etcher which I have used with 100% success in
the past and was surprisingly fast in burning images.
It took for ever as well, eventually it run a verification routine and
it was done.
Is there someway one can avoid creating such a large iso for no reason,
when the filesize is a fraction of the whole disk.  One way I thought of
was to shrink the partitions to just about 99% full, and leave the blank
part of the disk as not allocated.  Would that help?
Is there some fancy command line that does just that?

Thank you in advance

 "The most violent element in society is ignorance" rEG