Time machine works perfectly fine (sort of). I'm currently using 10.5.1 and I successfully restored my system from a time machine back-up. Assuming u have your stuff backed up in time machine, here's how:
1. Reinstall your entire system (just like how you did a fresh install)
2. Once you're on the registration page and the migration assistant shows up, choose the option "from a Time Machine Backup"
3. Select the drive or volume storing your backed up data
4. Let it restore. This may take some time depending the size of the data you have backed up.
5. Once it has completed, everything should be back to how you first customized it.
Only thing I've encountered so far with Time Machine is that, I would be getting an error message saying that the disk I'm trying to backup is already full and to choose another drive. The spare drive I have for my Time machine is 325gb and the data being backed up is less than 320gb.
Well, there you go. Hope I was able to answer your query. Based on how I understand it.