Software that enables you to turn a hard drive into a repair depot is pretty expensive. But this isn't the idea with SubRosaSoft.com's Das Boot. Eseentially Das Boot allows you to turn any storage device into a Mac OS X diagnostic, repair, and maintenance tool.
Using Das Boot is very simple and easy enough for even the noobs out there. You select the drive you want to copy your applications and documents to, and Das Boot does everything for you. When you need to boot from your repair drive you will see a special launcher, which gives you full access to all the applications you have installed. Amazingly handy for helping with the neighbors broken Mac.
So if you haven’t already guessed, yes you can use your iPod as a repair drive! You don't even have to reformat it, just use it as a normal drive and all your data should coexist nicely. This then allows you to run Diskwarrior and other apps onto it, and if needed you can format your drive from the finder. Nice.
Das Boot is freeware and you can get yourself a copy right here.