Switching drive sizes requires nothing--both older PPC macs and the newer Intel ones use something significantly more advanced (albeit less configurable) than BIOS, so hard drive properties are automatically detected, and you just need to hold down "C" to get it to start from the optical drive. It just works, always has.
Installation really is about that simple. I believe if you install a completely unformatted drive, when you first boot from the OS install discs, you must go to the menu and select "Disk Utility", where you should see your drive and can partition and format it in preparation for OS install.
The only glitch you might run into (I did) when doing this is after you format the drive, it may not show up as available to install OSX on in the "Select a Partition" window. Restarting fixed this, however--I guess it fails to detect the status change if you format it for the first time while the installer is still running.
Minor hassle, really, and 10.4 may have already fixed this--I think it happened to me under 10.3.
And indeed, particularly on a laptop, do yourself a favor and don't install all those extra printer drivers--they're mostly CUPS stuff for obscure older printers that you'll probably never even see, and take up literally gigabytes of space. Same goes for the language translations. If I'd been thinking when I first got my MacBook I would have reinstalled first thing just to not install that stuff (it comes installed by default), but I didn't, so I had to go back in and delete it manually. I don't believe I broke anything in the process, but using an app to wipe that many language files was unsettling.