Installing Games on my external harddrive

Is it a bad idea? (quake 4, doom 3)

Well, as long as you don't take files from there and put it on, oh say, your friends hard drive on another computer. Otherwise, its your hard drive, your files, and it'd be just like people sharing a disk with and X box game.

I'm pretty sure he's not asking about the legal issues concerning it, more like if he would suffer from any performance decreases / shortening hard drive life etc.

Is it bad for my comp or my harddrive's health?

dunno about the health thing, but yes it does decrease the performance. it depends how fast your HDD can transfer info to the USB port to the CPU... and if you got USB 1.1 you're dead, there not that slow but slow... Firewire is better than USB too

yes some external drives are slower then interneal...check with what speed transfers are..