Most new computer systems support booting from USB attached hard drives, so this would not be a problem. The only cavet is to make sure the Linux distribution chosen installs the bootloader entirely (the MBR section in particular) to the external USB hard drive and leave the internal hard drives MBR alone and untouched.
99.99% of all USB external hard drives are compatible with Linux.
Last edited by Lenard; 01-15-2008 at 10:30 AM.
Reason: update answer