Doing this is pretty easy:
- Go to Settings > Users & Groups
- Control Click on your username and you see an "Advanced Options..." menu item
- Scroll down to Home directory and Choose.. the disk you want to use
You'll be prompted to reboot and when the machine comes up it will be like a new user setup with all the Apple ID login etc. Once all that is done you can copy over files from the old home directory, things like Documents, Developer, Movies, etc.
I left it to iCloud to sync over my music and pictures.
Perhaps there's a way to move over the old home but I decided not to risk it.
All is working well now but the external disk is noticably slower than the fast internal SSD but Applications, which are still on the boot disk, still launch quickly.

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