Rahane will have to fill-in as captain in Virat Kohli's absence for the last three Tests in Australia.
Rahahe, the designated vice-captain will be stepping-up in Kohli's absence when the original skipper returns home on paternity leave to attend the birth of his first child in early January.
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"Well, I saw him captain in one Test against Australia (in Dharamsala in March 2017) and found his captaincy to be fabulous. He was really an aggressive captain," Chappell told PTI during a virtual interactive session 'Cricket Conversations' anchored by senior cricket journalist Ashis Ray.
"I remember a couple of aspects about his captaincy. What stood out for me was in the Australian first innings, Warner was going well and getting on top of Indian bowlers. He brought in Kuldeep Yadav (debutant) and he dismissed Warner."
"The second thing I remember was India chasing a low total and they lost a couple of wickets. Rahane just came in and attacked the Australian bowlers and scored some 20 odd (38 off 27 balls). I liked that approach."
"Look, as a captain, you always have two choices — one is the aggressive route and the other is a conservative approach. I have believed that in Test cricket aggressive approach is a must and Rahane is aggressive."
From Australia's perspective, Chappell thinks first-choice opener David Warner's injury may expose the team's chinks at the top of the order. Warner has been left out of the first Test in Adelaide due to a groin strain.
"Everything that could have gone wrong with opening has gone wrong. Warner is out and Joe Burns has been struggling. Look, (Will) Pucovski after another concussion, I don't think it would be good to play him both in terms of confidence and medical point of view," he said.
"I think Australians will go with Joe Burns and Marcus Harris opening combination. I thought Cameron Green would have played in Sydney but after his century in the warm-up game and a couple of wickets that he picked, there may be a temptation to play him in Adelaide."
"But top order is the biggest concern. It''s not just about Warner''s presence but the manner in which he scores those runs has a detrimental effect on the opposition. In his absence, the responsibility will now be on Steve Smith and Marnus Labuschagne," Chappell added.
While admitting he would love to watch an elegant Kohli over "ungainly" Steve Smith, Chappell urged the visitors to find a way past their historic nemesis. And he doesn't think a Neil Wagner style bouncer barrage is a way to follow for the Indians.
"You have to unsettle him (Smith) by changing plans. If you bowl short of length, then he will be rocking back (and hitting for fun) all day. Somehow, you have got to get him to play forward even at the cost of few runs. But you will still have some chance of getting him out."
"I believe that short-pitched stuff should be used judiciously. It should be a surprise weapon. What New Zealand did was a waste of energy. If you bowl a bouncer, make it count," he said.
India's biggest miss for the tour will be their experience tall quick Ishant Sharma. In his absence, they will need a capable third pacer alongside Jasprit Bumrah and Mohammad Shami. Chappell informed of a conversation with head coach Ravi Shastri where he learnt that Umesh Yadav might get the nod.
"I was having a drink with Ravi (Shastri) the other day and he told me that probably (Umesh) Yadav will get the nod as the third pacer," he said.
"India have two smart quicks in Jasprit Bumrah and Mohammed Shami. If you ask me, if the team batting first scores 300, you are on your way to winning the Test match at the Adelaide."
The Test series to be played for the prestigious Border-Gavaskar Trophy will kick-off on December 17.