For me running the system off of the internal drive makes the whole system feel faster. But the problem could also be my ancient usb drive.
The best thing is to try it out. Use CCC to copy the dmg to your Media partition - DON'T DELETE THE CONTENTS OF THE MEDIA PARTITION!
Then boot up your regular ATV OSX and bless the boot.efi on the Media partition. Reboot and your Leo should come up ;-)
To delete the Leo install, remove all folders except those that existed before you copied over the dmg (Scratch, ...)