Wow, going from a 10,000 rpm fast HD to a 4200 rpm slow drive like the iPod is going to be very noticable running OSX. It will work (I am typing on a PB with such a drive), but my next purchase will be a 7200 rpm notebook drive to add a little zip to the OS.
As for voiding warranty, Apple sold these as both mp3 players and external HDs, so I cannot see that concern to be big in my book.