when I first started using OSx86 with Tiger in 2006, I was running it off an external drive because I didn't want to dedicate my system to OS X yet. Ali C is correct... as long as your BIOS supports external drive booting then any drive that is recognized during the BIOS boot should work. The same is true for flash drives. I use two 8GB flash drives as installers for my retail 10.5.0 Leopard DVD and 10.5.4 Server DVD so I am able to install these systems to my Hackintosh as needed (mostly needed for testing).

I run all my test systems on external drives... I really don't think it matters what rpm the drive is because speed is solely relying on your USB speed. USB 2.0 or Firewire is (of course) best in these instances.

For best results don't make your system too graphic intensive either as this will suck the speed needed for other data transmissions over the USB connection.

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