Usually if you just install it to the point where it is done with setup AND personal setup, when the Desktop is first displayed, turn off the computer, take the Hard Drive out and move it to the other machine. My other recommendation if you have a FireWire Cable is to hook the Machines together and put the iBook you want to install OS X to into Target Disk mode by pressing the T key upon boot, hooking it up to the iBook 12, and running the installer on the 12-inch iBook, and ultimately just going through the normal install process, paying attention to install to the FireWire Target Media.
'''If you mean that you just want to install it normally on the machine, I say go for it, it should work out fine.'''