One good solution for backing up the home server itself is to attach an external drive, say via USB 2.0 or eSATA. For this to work, though, you need the supporting software like Norton Ghost or something similar installed on your WHS server.
Windows Home Server Power Pack 1 (aka WHS PP1) added a feature to perform backups of the WHS shared folders to an external drive -- as you mention, this feature is only intended to do the data side and not the OS.
If you have an HP MediaSmart server, you could try the method mentioned in Quick & Easy Windows Home Server Backup and Restore. The author said it worked for him, but of course, caveat emptor. This technique has you creating a disk-image for your backup, and using that to restore from in the Recovery Disk / Restore disk process.
If you want a faster way to recover your OS and you do not have a Media Smart server, you can also check out these instructions on how to use a USB flash drive for installing WHS, and merge in the instructions found above for restoring a disk image vis-à-vis the OS Recovery disk process.