Yes, it's possible on newer machines (G4 AGP machines and newer). Simply boot from your OS X install CD and select the external disk as the destination.
once it's installed you can easily switch between the bootable devices using the option key while booting or changing the settings in System Preferences -> Startup Disk
Make sure the external drive has permissions repaired. And if you have Disk Warrior, it's not a bad idea to defrag.
And while you can boot from an iPod, it's not recommended unless an absolute emergency as the iPod hard drive isn't built for long-term usage such as that.
And while you can boot from an iPod, it's not recommended unless an absolute emergency as the iPod hard drive isn't built for long-term usage such as that.
After the HDD on my iBook died, i installed
Panther onto my iPod - i have been using the iBook booted from the iPod for several months now and have had no problems whatsoever.
You should get a new hard drive and install it. Hard drives are cheap these days. Just use http://www.xlr8yourmac.com/ and use the search lasso and get a feel from other's experiences to get an idea for what to buy and how to install it.