Yes this can be done BUT....
1. I would use and external partition mounted in /mnt and not /home
2. If you are backing up a system that is in use, you need to exclude /proc /dev and external filesystems like those in the /mnt/ folder.
I use rsync or cp to do that. For example:
Code:
mkdir /mnt/backup
mount /dev/hdb1 /mnt/backup
rsync -xav / /mnt/backup
or
cp -xav / /mnt/backup
You will need to use a livecd to format the partition and restore the system onto it.