There's no particular technical reason why SD! couldn't copy an isolated User folder backup into another separate install (save for the obvious potential problems with unmatched UIDs, ACLs and the like), other than it adds complexity and a whole raft of confusion.
I've successfully done an OSX install to a thumb drive under 10.6... while that's different than copying the DVD, it's also more useful in most cases.
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--Dave Nanian
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