Time Machine has a hidden feature, to "Exclude All System Files". In Leopard Server's Standard mode, Time Machine is a service, and in Server Preferences you can control whether clients back up their system files, or skip them. This is logical -- for personal backups you want everything, but if you have enough users to justify a file server, you might well not want to back up the same Leopard system files for each user.

Today's handy-dandy discovery was that Mac OS X Leopard "user" has this feature too, but there's no visible knob to turn it on. Interestingly, I cannot find such a control in Server Admin either, which could be my oversight or could simply be a bug (I've reported it, anyway).

Instead, if on the client you add /System to Time Machine's list of directories not to back up (I also skip /Developer, /sw, and my music files), Leopard pops up a handy dialog, asking if you really want to "Exclude All System Files". I chose yes, although I'd like to know exactly what (directories) are excluded by this option.