I've got a bad habit of losing or scratching up my optical media, which is why one of the first things I do when I buy a new operating system—like Leopard—is copy an image of the disc to my hard drive. Once it's in the digital realm on my hard drive, I can rest assured that no carelessness on my part will result in a $100+ coaster. But how do you use that disk image now that it's not in DVD form? Well, I use it to turn my old iPod into a Leopard installation beast.
In general a plain jane external hard drive should work fine, too, but I generally use my iPod when I'm doing this, so that's what I'm covering. You can just as easily replace "iPod" with "external hard drive" for the rest of the guide if you want to use an external drive or large thumb drive.
First, assuming you've got a copy of Leopard, you'll need to create a disk image of the installation DVD. (If you happened to download the disk image off BitTorrent or something less legal like that, that disk image would work and you can skip this step, but I'd recommend going legit.) To do so, insert the disc, fire up Disk Utility on your Mac, select the DVD image in the sidebar (probably ends in .dmg), and click the New Image button at the top of the window. Give it whatever name you want (like Leopard.dmg) and save it to your hard drive.
When it's done, you should have that disk image file on your desktop. Now it's time to restore that image to your iPod (or other external hard drive) so you can boot from it to install Leopard. Here's how that's done.
First, assuming your iPod is mounted, you want to erase it. To do so, go back to Disk Utility, click on your iPod in the sidebar, and go to the Erase tab. Then just choose Mac OS Extended (Journaled) from the drop-down and click the erase button. Disk Utility will ask for confirmation, you'll confirm, and your iPod will be formatted and erased.
Now it's time to restore the Leopard disk image to your iPod (or whatever external hard drive you're using), and again you'll be using Disk Utility. Make sure the iPod is selected in the sidebar, then go to the Restore tab. Drag the Leopard.dmg image into the Source box (or browse for it by clicking the Image button), drag the iPod into the destination, and click the Restore button. Now you'll just have to site back and wait a few minutes while the disk image is restored to your iPod.
When it's done, you're ready to use that pod to install Leopard. Open the Startup Disk preference pane in your Preferences, choose Mac OS X, 10.5 on Your iPod, and click Restart.
From this point on, all you've got to do is follow our previous step-by-step guide to upgrading to Leopard. When all's said and done, you've got the tools to update your computer to Leopard with nothing more than your trusty iPod.
I realise that this won't be for everyone, but if you've ever wanted to know how to install OS X from an external drive or iPod (I chose my iPod because it's older and perfect for this sort of thing, since it doesn't have any really important data on it), now you know how.