Here's what I did to install Mac OS X from a disk image (2 Macs with a FireWire connection are necessary).
1. Opened Disk Utility.
2. Because the original Mac OS X install DVD disk image I made was in Read/Write format, I selected it from the list and chose "convert" at the top to make it Read Only (and selected no encryption).
3. I then repartitioned the eMac's hard drive (which was mounted on my desktop via FireWire target disk mode) into two partitions (3.6 GB and 145 GB, respectively).
4. I selected the new, read-only disk image from the list and selected the "restore" tab.
5. I made sure the correct disk image was selected a chose the small partition. It took about 5-6 minutes to "restore" to that partition.
6. I ejected the eMac's hard drive from Disk Utility and disconnected the FireWire cable from the eMac and turned it off and waited a couple of seconds.
7. I turned the eMac on and forgot to hold down option (in order to choose the startup disk).
RESULTS
The eMac turned on and loaded the installer beautifully. I was prompted with the typical "Choose the language to use for this installation" and the list of 15 languages. I chose English, deselected the additional fonts, printer drivers, and languages, and 5 minutes later Tiger was installed (it goes MUCH faster than when it reads from the DVD).
In my case, I forgot to hold down option and it still worked out.
The Tiger disk image takes up about 2.6 GB of disk space. I created a partition of 4.0 GB, which came out to 3.6 GB. So, in my test example, I wasted about 1.0 GB of hard drive space.