Using SQL Server 2012 for Business Intelligence Features Only, No Database Engine I would like to implement SQL Server 2012 purely for the Business Intelligence Features: SSIS, SSAS and SSRS on its own server.

I current have SQL Server 2008R2 Database Engine installed on another server. It is maintained by a vendor, so it cannot be upgraded to 2012. 

From what I understand within SQL Server 20102 Business Intelligence tools, you are able to use 2008R2 databases as database targets/sources. Ideally, I would like to be able to create 2012 BI Projects: SSIS, SASS, and SRSS and deploy the solutions to Sql Server 2012, but transform the data in the 2008R2 database.

Is this setup possible? If so, other than licensing are there any drawbacks or potential problems?
Perfectly reasonable proposal. No technical issues from your description of what you're aiming for.

I'm wary of commenting on licensing issues and would encourage you to verify you are correctly covered with either Microsoft or your reseller. In principle, the same licensing would apply for this arrangement as would apply if you were also deploying the database engine to that server.