That will work, and represents the supported recovery method. You can also try cloning the entire system drive to the new drive. This is unsupported and, as you've noted, doesn't always work perfectly. If you decide to go this route, I would do this:
- Clone the drive, expanding the second (D:) partition to fill all available extra space. Leave the system partition at 20 GB.
- Perform a server recovery/reinstallation.
I'm not on the WHS team, I just post a lot. :)