External HD with a Filevault 1 home directory, readable from Lion?
Yes you can. I've used this to recover data from an old Macbook Pro hard disk when I couldn't boot the computer itself using a SATA-to-USB caddy.

Once the old drive is attached, first you need to locate the .sparsebundle file containing your encrypted home directory on your old hard disk. This lives in a hidden folder

/Users/.&lt;username&gt;/&lt;username&gt;.sparsebundle 

in my case this would be 

/Users/.binarybob/binarybob.sparsebundle

Once you've found this, you can mount it using the terminal with

hdiutil attach binarybob.sparsebundle

You will be prompted for your password. Once you've entered it correctly, your home directory will be mounted and visible as a drive from the Finder (and rooted  at /Volumes/binarybob)