Can I install a second Leopard partition on an external usb hdd and use Boot Camp to boot from it?
Yes you can do that. I would recommend firewire and not usb. Once installed on the drive go into system preference and it should be an option under startup disc.
How can you use bootcamp on an external ?
Since I use TM, can I just restore the OS to the external hdd and have that be bootable?
Yes, just connect the external and the TM volume, start the disk with the Restore DVD, and Tools-->Restore from Time Machine and restore to your EXTERNAL drive.