Upgrading one partition to El Capitan while leaving the other on Mountain Lion
Yes, you can go ahead and  install El Capitan to the smaller partition. 

You just need to run the "Install OS X El Capitan" application and select the proper destination volume. I would first use the Disk Utility application to erase this destination volume. You do not have to use a USB drive to install El Capitan.

During the installation, the Recovery volume following destination volume will be update with the proper code. The Recover volume for Mountain Lion will be unchanged. The result will be two different Recover volumes on your internal disk. Each will be given a different label so you can tell them apart.

During the installation, I was not asked, if I wanted to use Core Storage. In the event, you are asked, the answer should be No.


  I verified this procedure by running the "Install OS X El Capitan" application from an internal Yosemite volume. I installed El Capitan to an external drive. The Yosemite volume was unchanged by the procedure.


I also have had Yosemite and El Capitan installed in different volumes on my internal drive for some time now. You can switch operating systems by selecting the Startup Disk in System Preferences.