Basically, the answer is yes, you can create a tarred backup, save it to a CD and restore it. The main options you should pay attention to is preservation of file attributes (-p switch) and preservation of leading '/' (-P switch).
But the problem that might occur is that if the archives gets corrupted, you can say goodbye to it.
The solution would be using DAR wich is a sort of tar but has more features and, if the archive gets corrupted there will be only one or very few files inside affected, the rest will be sane.
http://dar.linux.free.fr/