This is for those of you (like me) who tend to scratch disc media. To do this, you need a copy of Leopard, an external hard drive or old iPod (more than 6.4 GB) and Disk Utility (you have this, don’t worry).
First, insert the Leopard install DVD. Then open Disk utility. Click “Mac OS X Install DVD” from the box on the left. Then click “New Image” and let it do its thing (this could take a few hours).
In the end, you should have a file that looks like this: 
Next, take your Hard Drive/iPod, and format it with Disk Utility. To do this, click on the hard drive, then go to the Erase tab and select “Mac OS Extended (Journaled)” if it is not already preselected. Then all you need to do is click Erase and confirm you wish to do so
Afterwards, make sure you have your external drive highlighted and then click the Restore tab. Then for “Source” drag in “Mac OS X Install DVD.dmg” and make sure that the destination is still the external hard drive. When all this is confirmed, hit Restore.
Now you’re essentially done if all you wanted to do was back up your copy of Leopard. If you wish to install Leopard, open System Preferences -> Startup Disk, and select the drive you just restored Leopard onto. Then just restart your computer, and follow the installer’s instructions.
Similar Posts:Target Disk Mode: Use Your Mac as a FireWire Drive
Use Time Machine with Smaller Hard Drives
Using Macfuse To Mount FTP and SSH as “iDisks”
More: continued here