Yes, place the new drive into an external firewire case like the one noted in the prior posting. Attach via firewire.
Format the new drive as a Mac OSX volume using Disk Utility.
Use Carbon Copy Cloner to clone your existing drive onto the new drive. Be sure to set Carbon Copy Cloner to make the clone bootable! Otherwise the Darwin links won't be created to make the new drive bootable.
Try booting off the new drive. If successful, shut down and swap the drives.
Once the new drive is in your PB, rename it to exactly the same as your old drive and everything should be as it once was except now you have more capacity.
BTW, I've installed both the Seagate Momentus and Fujitsu 100 GB drives in our powerbooks. The extra space is great!