Woot! 180GB free on the internal drive, all photos from 2002-2006 back in iPhoto instead of being separated on the backup drive, downloaded 20GB of winter photos smoothly, all photos being backed up with time machine along with regular machine contents. All for $70 (and $95 in gift cards). I'd say that's a successful solution.
Both external drives are connected via USB. That leaves one USB port on the machine for the keyboard, stylus, printer and whatever extra peripheral (camera/iPhone/etc) we're using at the time. Luckily we have this weird man looking USB port hub thing that works even better than the fancy one we had bought at first and everything connected to it works smoothly.
So I'm very happy right now. Thanks for the help folks.