I see no reason why this wont work, but. Is there so much stuff on there that would be difficult to replace, apps etc. Reason I ask is that starting afresh with a clean format and clean install gives the pc a new lease of life.
Theres 2 programs i use, 1 called nlite the other called drivermax pro. The latter will backup existing installed drivers to a file. Nlite will create a windows disc from your existing win xp disc but will also include all your drivers from the file you created with drivermax. So what happens is, you start the instilation of windows, come back later and windows is installed with the settings you want and all your drivers are there. 1 step job done. nlite will also backup programs but to be honest I have never done this.
Hope this helps, have a think about it.