Interesting Tests...
I've wondered that too. I've got a "standard" 1GHz G4 iBook w/ 60GB HD. I think it spins at maybe 4200rpm??? I've also got a 7200rpm Lacie 160GB FW400 external. A few months ago I booted from the Lacie backup, which worked just fine. I'm no techie, but I suspect any speed advantage gained by the faster drive would be cancelled-out by the (relatively) slow FireWire 400 connection, compared to being hardwired into the system bus like the interal HD is. Beyond that, it was certainly very usable and was never annoyingly slow. A second example might be more what you were asking. My brother has an identical iBook to mine, and the other day we connected them in Target mode and he backed-up his 3GB iPhoto library onto my internal HD. That took about 8-minutes. Then, when I got home, I plugged into my Lacie and copied his library over onto it. This time around it took less than 3-minutes, lightning fast compared to iBook-2-iBook. So for that exercise the external 7200rpm drive was twice as fast. So my take on your question, is that for working with massive amounts of data -- go with the fastest spinning HD you can find, it's worth it. (BTW, I bet if I was able to use the Lacie's FW800 connection, such as with a recent PowerBook, OSX would be noticably faster running off the external HD.) Like I said I'm no techie but that's my two cents worth.