Read/Write sparse image on disk with files

[psasser]

Okay, hopefully this will not be as goofy as my last post. I have a 10GB hard drive as my startup right now in a G4 AGP Graphics tower. I am replacing it with a 160 GB drive. I also have a similar drive as a second hard drive. I intend to create a disk image using Read/Write sparse image to clone my startup drive and save it to the secondary drive. My question is this:
Does this risk data loss on the drive I am saving it to? That's something I definitely can't risk. Second, will I be able to then transfer this image to my new startup drive and turn that new drive into a simply bigger version of the original? I hope this makes sense. In other words, I simply want the new drive to be a 160 GB version (or actually, 128GB version, due to my system limitations) if the 10 GB drive I'm ditching.