Yes you can, but I'd advise you use cloning software and another powered external drive instead, leave the TM drive as extra backup.
What you do is this. Get another external drive equal or larger than the 750GB drive.
Use Disk Utility to format this drive HFS+ Journaled.
Then download a (donations accepted, but otherwise free to use) copy of Carbon Copy Cloner, then clone your OS X boot drive to the external drive.
Hold option and reboot the computer, you will get a choice of bootable drives, including the external drive.
Once your booted off the clone, check it out and Repair Permissions in Disk Utility on both drives.
Once your happy it works good. Then make the internal hard drive switch.
When that's done, hold option and boot off the clone and simply reverse clone onto the internal drive.
You can also hold c and boot off the installer disks and use TimeMachine to restore to the internal drive.
However if there is a problem with your new internal drive or your disks are scratched, or your Superdrive fails, your might have nothing to boot from, with the clone you can option boot off of that and order a replacement drive or simply use it until the replacement arrives.
(well I guess you could place the old drive back in, then switch it out again, but it's risky working inside a machine, you could lose screws or static charge something or accidentially pull a cable, so the less inside time the better, plus you'll need the larger drive anyway to TM too.)
So you get a lot more protection that you can get online and working in a few seconds with a clone.
TimeMachine drives are not bootable, I wish they were but they aren't.
So it's best to have both methods at the ready in case one fails. 😀
(disclaimer: I haven't used TimeMachine myself my needs are more specialized, I'm quoting second hand information and may contain inaccuracies as I'm not a TM expert)
For further information I point you to Pondini's excellent guide of the capabilities of each here.
http://web.me.com/pondini/Time_Machine/Clones.html