How to Boot From an External HD

I am still pondering getting a mini - I know that I will want a much larger hard drive (since I want to use it for media and will keep tons of video and music on it). I would like to know how to boot from an external hard drive. I've searched google, the forums, and apple support, and see people mention it all the time, but can't find out how to do it, etc. Is it just like running off my normal HD but all the files are kept on the external (so I could still access files thru itunes, etc.)?
Also, I would like to get a 500GB+ drive to keep my files on, and was wondering if people had recomendations. Brands, USB 2.0 or Firewire, etc.
Apologies if this is a novice question - but I can't seem to find answers anywhere.
Thanks in advance.

Firstly, it is certainly possible to boot from an external drive, so what you plan is not only feasible, but since the external would be faster than the internal drive, also rather beneficial to the efficient running of the mini - meaning, the system will be notably faster in use.
In my view, the best option is an external firewire drive, not USB. The reason is that FW has it's own dedicated controller while USB doesn't. In effect, it means that FW data transfer speeds are stable and consistent, while USB rates vary widely, depending on what else the system is doing.
Once you have your external drive connected, the easiest way to make it bootable is to copy your existing MacOS install from the internal drive using software such as Carbon Copy Cloner (downloadable from www.versiontracker.com). This will avoid having to do a lengthy reinstall. Once MacOS is copied, then open System Preferences, and the Startup Disk preference pane, and click on the external drive icon. The next restart will then be directed to the external.
Once you have booted from the external drive, you use it just as you would an internal, and MacOS will treat it as the boot volume, including by default, placing your user account folders on it, including your documents, music etc.

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