ok i followed you up through the first paragraph...
yes, you can make a tarball, then unmount your /var partition and copy /var's contents back into /var (which will now be just an empty directory on your / partition)
edit your fstab and bang youve gotten rid of your old /var without even rebooting.
if youre worried about stuff that needs /var to be there while you do this, just do it in knoppix, as you say. no need for fdisk.
as to having your /home on the old drive still, not sure what you mean by that. everything will be on the old drive (the larger of your old drives, the one you are keeping, that has / on it) when you are done with this.
if you want to put your entire install on your new drive you can maybe do that too, with proper partitioning of your new disk and fstab editing.