My PowerBook hard drive is always nearly full. The biggest culprit is iTunes, particularly with the movies taking up around a gigabyte or more each. So I have decided to dedicate a LaCie portable drive (160 BG, the largest) to my complete iTunes library of music, TV shows and movies.
I will probably maintain a smaller library on the PowerBook containing favorite music and recent movies. The library of choice is easily selected by holding the option key down while loading iTunes.
The only danger I see is the piotential for erasing the sync-ed larger library from the iPod. This will become a moot point when the LaCie drive has more files than the iPod can hold, but for now I will have to be careful when sync-ing the iPod.
Eventaully the 160 GB LaCie drive will mirror an Apple TV. But that is down the road a ways.