For a genuine (full) backup, use 'tar' - that's what it was made for (and it acts properly on symlinks and preserves attributes etc). Just be aware that tar originally worked with tapes and just wrote all data into a single stream with a few markers. That behavior is preserved, so you need to be careful of a few things:
1. For huge jobs do not compress (for 'split' archives you cannot compress anyway)
2. If your archive is going to be large, make sure the filesystem on your destination drive will support very large files. Otherwise you will need to write a script to create/update the split archive.
Do NOT use 'dd' if the destination is smaller than the source - dd mindlessly reads sequential blocks from the source and writes to the destination until something happens to interrupt that process (source ends, destination is full, errors, limits set as options to dd...).
You will not be able to preserve a 'lilo' boot block. Even with 'grub' if you reformat the drive etc, it will need a little coaxing to get the system running (but in the case of reformat etc, if partition names change you will need a live CD to fix 'fstab' before anything runs - unless you also have busybox). You can preserve the MBR using 'dd'. However, the 512 bytes also contains information on the partition - writing back that MBR destroys your current partition map as well. If you may need to restore the MBR (but without touching your current partition map) then you will need to read more about the MBR and figure out just how many bytes you need to copy to preserve the booting part - then experiment on another HD just to make sure you don't screw up your system.