I've transferred system software onto one of those via LocalTalk before - it took forEVER. It worked, though.
I formatted the hard drive, installed a basic System 7.1 on there from diskette, then booted the new system and transferred the installer files for System 7.6.1 over LocalTalk, then rebooted with a 7.6 boot disk and ran the installer. It worked, though nowadays I just use an external hard drive (so I can boot from it and store whatever OS I want, instead of waiting on a slow CDROM or floppy swapping), or, worst-case scenario, I'll pull the hard drive and use another machine to transfer it.