with the install disc in and the TM drive plugged in, go to disc utility. highlight the DVD in thse sidebar and choose "restore". THe DVD is the source, the TM drive (I use a second 10 GB partition on the TM drive) is the destination.
when the process is done remove the DVD. you shoud be able to go to your startup disc prefs and see now the install disc icon, though the media is not physically in the machine. If you are curious restart from this location. the computer will boot from what it thinks is the install disc.
Once you boot into the installer, yoou can quit out of the install process, ands from the menu bar there are options on restoiring from a TM backup. Alternatively, you can do a full install friom the disc image, and then at the end restore user accounts and appls etc. from the TM backup. I'd suggest the latter,