Is this a horrible idea?
Not realy, but this case is not covered by official documentation at all. So it may be a kind of trial-and-error experience. If your bug tracking service is mission critical and you cannot afford even a single bug to appear, then I would advice to follow the Alex.V's recomendation and create two separate projects within one YouTrack instance.
There is one more thing to consider here: distinct YouTrack installations will have separate user & permission data. Users will be forced to register twice in two different YouTracks, to ban the user you'll need to ban him/her twice and so on.
If you're ready for some risk and fun, here's how to actualy install several YouTracks on the same machine:
Option one: virtualization
A naive, but bullet-proof approach. Just setup a virtual machine on the same server and install the second YouTrack inside in the same way you're setting it up now. There will be no way for YouTracks to interfere with each other, so this almost guaranteed to work as expected. Although relatively safe, this scheme is not very resource efficient.
Option two: separate processes
Start with duplicating your existing installation: one more dedicated OS user, another instance of java service wrapper, another service script. After that you should have two identicaly configured YouTracks installed as two different OS services. Now it's time to configure them in a different way. In wrapper.conf one can set arbitrary Java parameters, so here you can set base url and other necessary settings. Make sure to configure at least different database, backup and log files locations.
Option three: separate web applications within a single server
YouTrack JAR file contains an application itself and a web-server for it. To avoid resource usage doubling you can switch to WAR deployment to share a web server between applications. Install Tomcat, deploy two YouTrack wars under different names. As for configuration, it should be done via web.xml
configuration file. All java options set (-D...) will now affect both of the YouTracks. Here is an example of database location configuration via web.xml
.