Thanks for the heads-up about the drag-and-drop method and using Migration Assistant to restore the iBook drive.
The trouble-shooting guide didn't specifically address the partition size issue except for offering possible work-arounds, but it did explain how SD! works to some extent. The partition I created on the new external is 2GB more than the max size of the iBook drive; I suspect that this will be enough extra space to perform Smart Updates in the future.
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