The coolest mod I think is an internal CD rom drive, yes internal.
The A1200 does have an unbuffered IDE interface but I think it's ok for laptop devices that draw very little power.
Anyway what you need is a notebook CD/DVD to standard IDE adaptor, and a cable that allows two 2.5" IDE drives to be connected to the same connector (may have to make one of these)
Then you just set the old notebook CD drive as slave (most of them will already be set as slave anyway as old Pentium 1 notebooks usually only have one IDE channel anyway).
Parts are cheap enough, maybe less than £10 for a 4Gb drive and an old Toshiba Satellite CD rom drive. The adaptor cost me about £4 from ebay. Just need the cable now and the software to make it work and then it's down to some serious thinking where to mount the CD and cut a slot for the motorised tray.
PS I've never installed a hard drive apart from on the old Amiga 2000s with the Supra 40mb hardcards so don't even have the WB3 or 3.1 hard disk install disks....even if I did they probably have mould on the disc surface and will destroy the internal drive anyway!