I'm a newb and I re/compile kernels OFTEN!!! In the begining I reinstalled OS' almost with every compile, but after reading the kernel comile guide (under the slackware forum) I learned how to have more than the last kernel option available. The guide is here:
And the instructions I'm refering to are right at the top. Outside of a bad kernel compile I can't imagine a good reason to reinstall (and I've even found ways to get around that).
The link in the post previous to this one references an app called qemu. I've never used it myself however it sounds a great deal like VMWare and if so would be perfect for dry runs of kernels and app installs (not so much driver configs I think). I personally use VMWare ($118 USD for students!!) not only for dry runs but to keep a copy of M$ around for all of the unpaid helpdesk work I have to do for my computer illiterate family.
Lastly, when I do rebuild a machine I save /etc, /home, and /root directories and that has served me WELL!! You forget how many little tweaks you make to a Linux OS over time until you rebuild for whatever reason and find your five-button mouse not working without any rememberance of where you found the config last time. Some say to save the /usr/local directory as well and as a newb I can't disagree, I can only list it as an option I've never seen the need for.