You can backup a Windows 7 System Image to your external so that reimaging your HD is as easy as booting the Windows 7 DVD/Repair CD and applying the saved image to the HD or a replacement.
However, if you are wanting to reinstall to overcome bloatware or for performance reasons, then you want to back up your files so that you can transfer them back after a clean reinstall of Windows 7 to your HD.
If you are familar with your active User files, then you can just drag their folders (Documents, Pictures, Videos, download, etc) over to the external one-by-one from the C:Users folder. If you are afraid you will forget something then just drag your active User file over.
After clean reinstall, drag them back by opening the folder in external, selecting all, then dragging the whole group into the new folder in Windows 7.