BIS
With any Mac you can install a retail version of the OS providing that that version supports the hardwarenewer versions of the OS support newer hardwareOSX v. 10.1, for example, wont support the Air; youll generally need a version as new or newer than the computer you are installing on. The OS on the intall drive that comes with the Air will only install onto the Air, but is otherwise the same as a retail version. The minimum requirements of various Macs can be found at Apples online support.
I hope this helps.
skinny*k