iMac, Apple TV & Time Capsule - Expansion Help

Hi, first time poster so be gentle! I've searched around but couldn't find an exact answer to my problem so here goes:

I have the following set up:
iMac 320gb
MacBook Air
500 gb Time Capsule
Netgear Router

The time capsule, iMac and Air are all 'n' only so to speak and the time capsule is linked to the Netgear router that provides wireless functionality for the pc laptop and iphones etc that don't use 'n'.

The iMac and Macbook air all back up using time machine to the time capsule no problem and the 'n' only side of things works nicely too.

All is well!

However, I have just purchased Apple TV primarily stream the 200+ DVD's our family has managed to acquire over the years.

The Apple TV set up was a breeze and now has all the photos and music on it too - all synced without a prob from the iMac over the 'n' network

I have now started to rip all our DVD's onto the iMac using handbrake etc and I am really impressed with the quality of the preset Apple TV setting and the streaming from the iMac over the network - no stutter, great sound and picture - cool!

However, I am now upto DVD 69 and the poor iMac is fast running out of hard drive space.

So, this leads my rather rambling post onto the required advice!

I want to keep the time capsule for back up and it can easily handle the tunes, photos and other files, and, to a degree, the dvd's as well - however, it still needs to back up from somewhere - the imac - which is running out of space.

So, I am thinking I need another hard drive somewhere in the chain! I have read a couple of posts that suggest this is no issue.

The iMac looks nice and pretty sat in the corner in the kitchen and my wife would not really appreciate me linking up a brick of a hard drive there. I don't want to upgrade the iMac myself internally either - not confident enough to do that.

So, when I was last in the Apple shop one of the guys there suggested I add on a 500gb/1tb external hard drive to the time capsule via USB. He then suggested I store the movies on that and setup itunes to go there to get te movies for streaming to the Apple TV.

Does this sound like a good way to go? I am worried if I do this then the streaming is going to suffer as the iMac will have to stream the movie from the external hard drive -> time capsule -> wireless n -> imac -> wireless n -> apple tv!!
Sounds like a lot of wireless activity and could cause streaming problems?

I can't use a network cable from the time capsule to the iMac without remodelling the house or getting a divorce so maybe the lesser of 2 evils would be to have an external hard drive attached to the iMac directly?

I guess in regards to itunes I just have to import(?) the movie into the itunes library but select the option to NOT copy the file across - so it just references it? However, how can the iMac see the hard drive that is USB attached to the timecapsule? ALso, in regards to itunes - I have read a post somewhere else that mentioned option-drag-copy the movie files into itunes - how do you drag a file into itunes as such - I have always use the file/import option before - do I literally just have the movies folder open in itunes and another finder window open from the hard drive and option-copy them across?

I guess I just wished I'd bought the 750gb iMac in the first place but had no idea I'd be burning off 200+ DVD's in the future!

All help/suggestions would be appreciated.

Oh, final note/question - the Apple TV box is sat right next to the time capsule but I still connect wirelessly to it - would it really make a difference if I hooked them up directly with an ethernet cable?

Thanks in advance

you can get pretty modern looking external drives these days, so before you do anything i suggest shopping around aand talking to your wife about it. Explain to her the pros and cons, and see what she says?

Yeah but I am also worried about noise and heat - the iMac/AppleTV and Time Capsule are whisper quiet as I have them laid out on a surface and not stacked or anything - I tried 'tidying' them up in a rack but even with loads of ventilation it caused the fans to come on a lot (on apple tv and time capsule) so they sit side-by-side with each other now.

Anyway, I think what I am going to do is this:

- iMac - has around 80GB free now so will leave it as it is
- TIme Capsule - now configured to back up the 80GB of photos/music and other files etc but told to exclude the movies folder on itunes
- All further movies will be on the time capsule and simply aliased on itunes - I've tried this and even with internet use, time machine in progress it still streamed a movie from time capsule->imac->aTV no problem! This leaves me around 400GB to play with for more movies over time - more than enough I like to think!
- As I don't want to lose the movies if my imac and time capsule get stolen/blow up/burnt in a house fire etc. etc. I am going to buy a USB powered portable hard drive (probably around 500gb - I think Lacie do one) and then just periodically back up the movies folder in itunes and the movies folder on time capsule and store it in the fire proof safe I have tucked away in the house!

So, not the slickest but I think it suits me best.

Cheers