Does Time Machine back up *everything*?

It doesn't clone your HDD per se, as making the external bootable, it just creates a full copy in one folder with many subfolders resembling the structure of your Mac.

CarbonCopyCloner would be a better choice to really clone your Mac's HDD to an external HDD.

You can also use Target Disk Mode if you can.
http://en.wikipedia.org/wiki/Target_Disk_Mode

 

Depending on the size of the backup, it might take longer to backup via TM than to make a clone via CCC.

But if those two Macs are in the same room and both have Firewire (or Gigabit Ethernet), you can skip the copying to an external HDD, and just use Target Disk Mode (or networking them) and the Migration Assistant.

 

Yes, you can do this. It will be fine.

 

It's okay. I just wanna sell CCC to all the people I encounter,

One last thing: CCC is not complex. You open it, select the source drive, select the target drive, press Clone and enter your password and you are done.
Then you just have to wait for the copy process to finish.

 

Everything, especially music and photos and all your preferences and other data.
Be sure to not exclude something in the TM preferences.

 

i just migrated my old mac pro to new mac pro. I just booted off the snow leopard dvd, said to restore from time machine and it worked like a charm.

I even went a step further. I created a RAID 0 with 2 256 gig SSD drives, and used time machine to restore my old mac to new mac.