Thanks for the input guys.
Seth, I had considered Raid 5 because it would be ideal, as you stated. However I was trying to use my motherboard's raid controller which is only 0 or 1. I'll have to check into raid cards and see how much they run. If they're not too expensive then it would probably be the best option since I could double my storage with 1 extra drive as you said. My processor is just an OC'd e6300. The fan/heatsink is about the size of a grapefruit
I looked at that Dlink product. It looks pretty sweet. Only thing is that I can get the cables I need for $60 as opposed to that thing which is quite a bit more. I'll have to remember that for future upgrades.
Francois, I'm not worried about fire or flood, I'm worried about a drive physically failing to work. It is fairly common and if I hang on to these drives for a while it will likely happen eventually (I've had a drive fail before). In that case, I'd rather not lose 500GB worth of movies that will take an extremely long time to replace, if I even can. So in that sense, it's worth the $110 to me to make sure that even if one drive breaks I have a duplicate on standby.
As for what resolutions it can handle, I'm not sure. It's a Panasonic TH-42PX6U that I got last year, so I hope it's able to handle whatever.