You wouldn't need to use an image if you got a drive. Rather, you'd just point the Migration Assistant to the backup, which would work fine.
Our "images" are just Apple disk image files, in their native format. I don't think the Migration Assistant gives you the opportunity to mount the image, though, so you'd have to run it after completing the full setup -- not necessarily how you'd want to do it.
In general, considering what you're trying to do, I think you should get an external drive. You'll be much happier that way...
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--Dave Nanian
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