Install OS X from second partition?

Yes. What you want to do is clone the Leopard DVD to that partition using Disk Utility, SuperDuper, or CCC. I used SuperDuper to make an install partition and works great.

 

This is what my friend and I had to do to install Leopard onto an older PowerBook. I had gotten the family license, but the PowerBook would simply not read the disc. On top of that, they cannot boot (easily) from a USB drive, and since my friend and I both have Intel macs, we weren't sure if using target disc mode would work. We put the Powerbook into target disk mode to partition the drive, imaged the install DVD over to one of the partitions and then restarted. After holding down alt to select the boot partition, we were good to go.