If my timemachine was done with lion, but my host is snow leopard, how will it restore? What I want is for my Mac to go back to exactly as it was, which was with lion.

Of course, there's no lion disk, so I've done a clean reinstall with snow leopard (new drive).

Should I restore from a lion timemachine onto snow leopard, or just install snow leopard, re install lion from the Mac store, and then restore from the time machine?
You should be able to point the installer at Time Machine during setup.  This will make the OS you have on there now largely irrelevant.  Just ensure your drive is USB attached, and hold option ⌥ down as you boot, select your installer CD for Snow Leopard, and do it from there.

The following Support Article should help




  Restoring your entire system from a backup
  
  If you are restoring a backup made by a Mac to the same Mac
  
  With your backup drive connected, start up your Mac from the Lion
  recovery partition (Command-R at startup) or Mac OS X v10.6
  installation disc. Then use the "Restore From Time Machine Backup"
  utility.
  
  Note: If "You can't restore this backup because it was created by a
  different model of Mac" appears when restoring a backup that was made
  on a different Mac, follow the onscreen instructions.