User Data Migration from HFS+ Disk Image
This is a rather broad question, so the answer will be somewhat broad as well. 

Adding a new user

You can create a new user in System Preferences->Users &amp; Groups. Once done you can then copy/move the copied user data into the newly created home directory and adjust ownership of files/directories.

There is a certain risk that some paths in configuration files etc will break, but this is hard to say from outside. You can reduce the risk by making sure the shortname of the newly created user is the same as it was on the old system.

Reinstalling an application

This heavily depends on the application in question. Some of them require just the .app directory to be copied, others have support files installed all over the system, and if they require registration it may again be somehow more complicated. To dig into this, please ask a new question and mention the name of the application.

PS: https://support.apple.com/en-gb/HT204320 implies that you should be able to select a mounted disk (partition) as a source for migration. But I don't have a way to verify that for 10.4.x.