The more technical details can be explained by someone more awesome than I, but it is a VBT... unless you completely purge said Sim of all friendships, contacts, memories, family tree, and pretty much anything linking him/her to the neighborhood. It is so much effort, you might as well just use Sim Surgery on SimPE. (I haven't used it myself, but it is a common suggestion.)
EDIT:
Here's a tutorial on how you can use SimPE to clone Sims. I gave it a quick test, and it seems to work well.