No, I don't think having a micro-partition for GRUB only is the best way to go with it, although it's an interesting idea, i must admit! :)
I would rather suggest that you reconfigure GRUB to use the GRUB installation in your other ubuntu system (the 9.10 one). By chance early today I answered a similar question, and you might find my answer there of some use for you too.
This is my favurite option with one only "gotcha": between 9.04 and 9.10 GRUB has been upgraded from v.1 to v.2. I am not sure if this might generate some problems or not, but if you wanted to play safe, you might want to upgrade your existing 9.04 GRUB installation to v.2 and after that eliminating the 9.04 and re-linking the MBR to the other installation (9.10) as described in the linked answer.
Another possibility would be for you to use the Vista boot loader. This procedure is described on the ubuntu community wiki. Please note that the linked page also contain tips and how-to for other type of boot recovery, so you might wish to visit it even if you are not interested in the Vista solution.
Finally, the third option coming to my mind is to make a clean install of GRUB from the scratch. I believe you can do that from the ubunty liveCD as well (for sure you can from an alternate installation CD, by selecting "install grub" from the menu), but you might prefer to use a tool specifically designed for installing and tweaking GRUB: the Super Grub Disk initiative. This is actually a very powerful tool that allows you to do much more than simply installing GRUB, so you might well find it useful beyond the scope of this specific problem.
Hope this help! :)
EDIT: as for the backup, I think /home and /var are the only places to save. What I normally do - however - is to make a complete tar.bz2 backup of my system tree before destroying it and to keep it for some months... just in case I later realise I missed to port some important data.