Running a mksysb out to a file is file. You can even do it to a NFS mounted FS. But the alt_disk_install is your best and most recommend method. Other options exist but the mksysb to a file that can be copied to even your PC and then burned to a CD / DVD can be done. I used the CD method before for DR and it worked fine. I would do it cold I.E. only the OS running to be sure it is clean.
But the alt_disk_install is the recommended method for upgrade's. it is simple to do and it the safest.