Kevin,
That will work. It's always recommended that back-up drives are created so that if anything happens to the main drive, there is a fall back. What you are doing is simply that.
If you clone the present drive, that will include setup.exe and all the associated programs that you need to install. So all is good.
Lastly, if you choose to use the cloned drive as your main drive, it should work fine. Because BIAB/RB registration is computer-specific, as I understand it, there should be no need to register again. If you do find that it's necessary to register the program once more, it would pay to plug in your old drive, de-register it and then plug in your new drive and re-register (this will maintain the 3 registrations that PG Music give).
Regards,
Noel