Exactly my friend. I can confirm that this works. I ran into a minor issue when I tried to install Windows using my above described method, none of the partitions were recognized properly (including size) so I couldn't distinguish which one was my internal drive and which ones were my external partitions.
So I simply went into the Terminal under OSX and formatted my external drive as FAT32
newfs_msdos -F32 /dev/rdisk#s1
(rdisk#s1 being my partition's ID ... you need to check that before you run this command)
I then went booted my MacBook Pro from the Windows CD by holding C on startup, installed WindowsXP flawlessly (mind you, I could have installed VISTA, WinME, Linux, whatever) and then booted into Windows after installation by holding CMD+OPTION+SHIFT+DEL at startup.
The final step was to install the drivers that Boot Camp created previously.
Voilá. You read it here first! (Do I get $13,000?

)
This is the perfect solution for me. I don't put crappy old windows living with OSX on the same drive but I get to keep an external drive on my desk at work. When I arrive at work I simply plug in the external drive, boot into Windows and work on that all day. When I get home, I run OSX.
Lovin' It.