I'm taking the plunge and getting my dedicated server up and running. It's going to be fun :( and quite a challenge!
At the moment I have some domains being hosted on a Virtual Server and some on a Shared Server.

I eventually want to have all of my domains on my Dedicated Server but having "mirrored" them on to my Virtual Server to provide a safety net against downtime, (hope that makes sense).

I will use an extra nameserver to provide the "mirror" link and will configure all of the domains into the Virtual Server, together with the files for each domain.

What else will I need to do to ensure that the "mirror" works?

A script and cron job to keep them both synchronized with one another. Schedule this script to run at predetermined times.

Does that mean I got the rest right? :D

The problem is you need something thats smart enough to know if your box is down and if it is, reroute the connection. There are a lot of expensive hardware based solutions that will do this but I don't know of any software ones. If you want a real time mirror, your going to pay out the rear for it.

You could rsync the data over every hour or so, set a low ttl on the dns host entries, and have something check for a valid http connection. If it can't connect, redo the dns entry and point to the standby. I've never done this and I don't know how technically feasible it would be to do so. You might run into problems if you have some busy sites and you set a super low ttl.

Here is a previous thread that explains how to do this using DNS.

http://www.webhostingtalk.com/showthread.php?s=&threadid=37696

This should explain it a little better for you.