Replacing the hard drive in an iBook is not a particularly easy task unless one is pretty experienced and doesn't mind (probably) doing some, as least minor, damage to its case. Why not just clone the setup on your external to your internal? And, self-replacing your iBook's internal would void any remaining warranty you have.
have you considered just booting the ibook into target disk mode and installing it to the disk that way? i've done it before with no problems.. infact, im going to do it again tonight since my ibook doesn't have a dvd rom....