I think it's going to be similar to the 10.0 -> 10.1 installation... you can either upgrade or wipe the hard drive and perform a clean install.
On the Jaguar "more features" page, it lists a "Clean Install Option" down towards the bottom -- i think this is a la OS 9 where you can perform a clean install of the system without having to reformat, and your old files and what-not will be placed in a "System folder (old)" folder or something like that.
i just bought an eMac from compusa last night, and they bundled the 10.2 upgrade discs with it. but when i went to upgrade, i didn't get the option to do a clean install, even tho it detected the old system i remember the 10.1 upgrade giving you the option to format the disk and do a clean install. anyone have more information on this?