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I've tried this before with the Express, it doesn't work.
I basically do the same thing with two Expresses in my house (using a Time Capsule as a main router) and it works perfectly.

One Express is in the living room and bridges to a ethernet-only TiVo. The other one is in my housemate's room and bridges to a switch that he has his ethernet-only desktop and his ethernet-only TiVo plugged into.

Both work perfectly because they're transparent to the ethernet devices.
 
To sum up, I've currently got a MBP and an Airport Express (which is connected to my stereo by Opt). If I want to add wireless backup, I can

(a) get a Time Capsule ($300 for 500 gb); or

(b) get an Airport Extreme ($180) and a third-party 500 gb hard drive (for, I'm assuming, less than $120)?

Does the Time Capsule have any compatibility benefits?
 
To sum up, I've currently got a MBP and an Airport Express (which is connected to my stereo by Opt). If I want to add wireless backup, I can

(a) get a Time Capsule ($300 for 500 gb); or

(b) get an Airport Extreme ($180) and a third-party 500 gb hard drive (for, I'm assuming, less than $120)?

Does the Time Capsule have any compatibility benefits?

Actually, I'm getting the cheaper Airport Express and a third-party 1TB drive. I'll be able to tell you if/how it works in the morning...!
 
Time Capsule is officially supported for Time Machine. I don't believe these other wireless/network drive setups are.
 
Dont you have to plug your modem into the ethernet of the AE? If you do that, you can't attach the external hard drive?
 
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