Time Machine backups are sparse image bundles which are as effective as partitions in separating different data sets, but have the distinct advantage of being able to grow or shrink on demand. The only limit on their growth is total drive capacity. The only disadvantage of sparse image bundles in the scenario you described is that like any dmg they don't mount automatically and have to be explicitly opened. They are worth considering as an arguable superior alternative to partitioning.
I understand sparse image bundles, but I don't understand how you think slolerner should implement them in this instance. (Edit: Are you saying that Time Machine's data can coexist with an unrelated sparse image bundle on the same partition?)
...I admit to being allergic to partitioning....
As one of the few local exponents of partitioning, I'll pass along a happy ending... I just discovered that I need to run at least OS X 10.7 to run this year's TurboTax...precisely the eventuality against which I always maintain one relatively small, empty partition...to be able to run parallel operating systems without buying a new external.
