Moving Home Folder Files To A New User Account

I'm having trouble moving my old user account into a new account.
The new account is an admin, but when i go to delete the old account (when logged into the new account), the process beachballs and System Prefs stops responding.
I've tried it twice.
Is there any harm making a disk image manually of the old user account, then mounting that and copying over files that way (rather than letting Mac OS X do it for me using the options in System Prefs.)?

Any ideas would help.

PS
I was following the info in the guide on this site.

I thought i'd add a few more details, as my original post was made in a rush!

There's been weird permissions issues/problems that i've been trying to correct (amongst other things, i've tried using terminal commands as well as using a Mac OS X install DVD to use it's utility to reset permissions etc. to no avail).

I'm working under the assumption that by creating a new user and moving all of the files into that new user's home folder - in the 'correct' way - i will make the permissions correct as they will be applied to the files for the new user as they arrive after the copy.

The home folder in question is one that started out on Mac OS X 10.0 (or possibly public beta era) as far as I can remember, and has been upgraded and migrated many times. The permissions are annoying me and I want to finally sort them before installing Leopard fresh from the DVD and then applying 10.5.2.

I'm also curious as to why System Preferences keeps failing to carry out the deletion of my old user folder, retaining it as a disk image. I can't understand why this is happening. (i remember using it before, around 10.3 or 10.4 and it worked, albeit not on such a large home folder). The delete option lets me select the preserve option (i had to delete some files on the Mac before i had enough disk space to allow this).