Can you upgrade the HDD in a Gen1 ATV?

Just wondered if it was possible. I have a 40G model, and I'd like to hardwire it from my viewing TV to my Airport or... to my switch since the airport/switch are almost directly under the big screen setup in the family room. The 40G drive wouldn't cut it for me so I wondered if its possible to pull it and throw in a really big drive... like 1TB? Maybe more, or would the controller inside prohibit that size drive?

I've also heard that you can also somehow connect an external USB big drive (say 2 TB?) to the ATV and disregard the internal drive working everything off the external drive? How do you set that up? I'm new to ATV, bought a jailbroken one and I'd like to get the most out of it.

YES. search for it. It's online EVERYWHERE! Almost everything you asked involves complicated(not too complicated, but complicated for the normal person) jailbreaking/hacking.

The ATV1 uses a PATA drive, so 1tb is out of the question. The biggest drive that you will find to put in there is 320gb. It is also the 2.5" form factor drive.