iMac running out of disk space - My Options?

Don't the iMAcs have replaceable hard drives? I also think that you should check out omnidisksweeper.

 

Do you mean the "All Movies" in the Sidebar > Search For or the "Movies" folder inside your Home folder?



If it is the first (and left part of the image), then you can do what you want to do, as that "All Movies" part is just a search for all video files and not an actual folder.
The search will include external HDDs.

Not really. It is quite a hassle to do that.
http://www.ifixit.com/Browse/iMac

 

If you play your films out of iTunes you could just add them and they'd all be there even though they're on two drives

 

If you're concerned about keeping your ~/Movies folder and its files easily accessible, couldn't you just use a symlink to point to the external drive? I'm pretty sure it's do-able, and would keep your user experience the same.

 

Consider replacing the internal iMac HDD with a 1+ TB drive. I know the thought of replacing the iMac HDD sounds daunting and intimidating but it really is not too tough. On a difficulty scale from 1(easy) - 10(hard) I'd say this job is about a 6.

 

Dropbox maybe?

 

Yes, TM can back up any external attached to your computer (you have to select it on the TM preference pane). If you have an iMac, I would assume you don't move it very often, so I'll get some external, transfer your iTunes media to them (use the consolidate items menu), so you can free some space on the iMac hard disk.
A symlink is just a shortcut in Finder, select any file/folder, right-click and select "Make Alias".

 

They seem to be discontinued Covertsurfer, but if you're looking for something similar in looks (to match your current external I assume) try the Buffalo DriveStation Combo4. I've got one and it looks almost identical.