Well, looks like my experiment has been cut short. The 1TB 2.5" HDs are quite a bit thicker than the 500gb standard size thickness 2.5 HDs so they don't even fit inside the mac mini server.
I spent an hour taking the thing apart and I kind of knew it probably wouldn't fit but took it as a learning experience. I'll be getting dual 750gb HDs instead and will do it all over again
The main thing I learned from this:
When you target disk mode a Mac OS X system with a RAID1 mirror setup via Mac OS X Disk Utility, it is actually recognized as a RAID1 set when plugged into a separate target Mac via Firewire. Imaging the RAID set worked fine.
When the dual 750s come in, I'll install those into the mini and will format the HDs as a RAID1 set. Afterwards ill attempt to use the image I built from the dual500s and image it onto the dual750s. I don't imagine there will be a problem with partition size given that it works perfectly fine with standard Mac OS X images. But I guess we shall see about that