Continuous reboot loop...

I recently ran the 10.5.5 system update on my iBook G4. However, when my laptop rebooted after the install it got to the gray screen with he spinning wheel, then it sat there for a while then it rebooted itself, now it's doing that in an endless loop. I can't boot into safe mode, or single user mode. However, I am able to boot from the install DVD.

I ran a permissions repair and a disk repair using disk utility, but that didn't stop the eternal reboot loop. So I'm thinking my only remaining option is to reinstall OS X. However my hard drive is too full for the archive and install (I've been meaning to buy an external drive, but I kept holding off because I didn't think it was a priority... now it is).

So here's my question: Can I use Disk Utility to make a copy, or a disk image of my iBook's hard drive onto an external drive, then do an erase and install on my iBook, then go back to the external drive and get the files I need off the disk image (will a disk image allow me to do that)? I'm really only concerned about my documents, photos, music & movies. I don't care if I have to re-install all my programs.

Anyway, I've learned my lesson and will start using Time Machine on the new external drive I'm gonna have to buy.

Thanks in advance for the help.