Is it easy to boot a from external drive with Snow Leopard on it? I have a macbook pro and planning to (finally) upgrade to Lion and currently have snow leopard. I am also planning to swap the hdd to something bigger. I wish to still be have the option of booting it from the current drive still.

Is there anything in particular I need to consider and whats the best of software to help me with this?
Very easy : Push the option key at boot chime and select the external drive on which you want to boot. 

You may want to use a FW enclosure for more speed (in comparaison with USB2)