The beautiful thing about macs is that applications, for the most part, ARE drag-and-drop.
The .app format contains all the data for most applications inside it. The exceptions to this rule are applications like iLife, which has huge media files stored elsewhere.
If you don't want to drag and drop, Tiger also comes with a great tool that can move EVERYTHING over (called the Migration Assistant, iirc) with the aid of a firewire cable.
Reformatting is then easy. As you reinstall your OS, there's an options panel that allows you to do that, or you can simply use the Disk Utility app included with Tiger to do that.
<edit> and yes, you can do this between a mac mini and iBook </edit>