How can I set up an external hard drive for FCP7 and Snow Leopard
~ so I can update my computer to Mountain Lion (or even Dandelion)
~ and not lose capacity to edit complicated ongoing FCP7 projects.

Would just Snow Leopard and FCP7 alone on an external drive do it?
How can I best set up and copy across to external drive?

That's for an Imac.

How can I set up an external hard drive for FCP7 and Snow Leopard
~ so I can update my computer to Mountain Lion (or even Dandelion)
~ and not lose capacity to edit complicated ongoing FCP7 projects.
Install SL and then FCP on the external drive

Would just Snow Leopard and FCP7 alone on an external drive do it?
How can I best set up and copy across to external drive?

That's for an Imac.
Carbon Copy cloner will clone everything onto the external drive.