Hey telemark!
It's actually pretty easy to accomplish this setup. Your macbook can be woken from sleep while closed in two different ways.
1) With the macbook closed, insert either a USB mouse or keyboard into a usb port, the system will turn on.
2) With the macbook closed and a usb keyboard or mouse already plugged in prior, simply click a button on that mouse/keyboard.
*3) I'm not sure, but if you have your usb devices plugged in, plugging in your display (via mini-DVI adapter) also wakes the machine.
Basically, put your macbook to sleep (close the lid) and plug something in, that should be all that there is to it.
NOTE: Your external power source must be plugged in for any of this to work.
EDIT: Some say that the displays need to be set to "mirror" mode, I have found this to be untrue. Also, do not believe the hype that a closed macbook that is on will damage the LCD from excessive heat. The macbook was designed to be able to do this function safely.