I"m not sure about the answer to the dualboot w/ a CM7 image on the SD Card, but I would guess that there is one. (I am currently dualbooting cm7 and stock, but they are both installed on the internal memory - if you want more info on that setup, let me know).
Regarding moving from one installation to another, I think the easiest way to do what you are asking would be to use the Titanium Backup app. There is another method of backing up in Clockwork Recorvery, but it is a little more involved, and I think would require you to keep the same size SD card (which I just noticed you are going to do). This is known as a "nandroid backup".
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