Sounds like a really good idea to me. I too am from an IT Background, as a Software Tester as well- but when it comes to web stuff, I am really, really lazy about it.

I usually make sure I have a good backup, then go right ahead and make the changes to the live site. If it fails badly, then restore the backup. Fails only slightly, then I assess and either rollback or press on until I get it right.

The sub-domain sounds like a good idea because it will seperate the sites out completely. The only thin i suspect you will need to be wary of, is if you have URLs coded into a page. For example, if you have www.mydomain.com as a link, it won;t work properly in your test site, unless you change it.

I would imagine that for most of the current crop of CMS and Blogging tools, then it is not really a problem, as most of them are database driven and easily configurable.

  A couple of nasty php loops will convince you of the wisdom of using a test server instead of using LP host for testing! I set one up on an old desktop using Ubuntu in less than 2 hours.

I'm set up locally with EasyPHP for development. Once I'm happy with the code/design, I upload to a staging subdomain for web-based testing, then to the live environment.