Yes this is possible. After your shrinking you have to make - of course - a backup again. If the shrinking size is to less, shrink, backup and make a cold restart and do it over again.
I did this with v2 several times, from 1,5TB, 1TB, 640GB to actually restore to a 690GB partition.
I did not use the Restore-CD, but the tool from WHS2011 to manage the restore via USB Stick - including all the needed drivers because I switched to RAID5 at the clients side
Regards Tom