Here's my iPhoto setup: I created a folder system for my images on my Time Capsule. There's a folder for each year. Here's my process:
- Back up to Images to DVD.
- Drag them to the folder on the TC.
- Delete them from iPhoto.
- Empty iPhoto's trash.
- From the iPhoto menu choose Preferences/Advanced and uncheck Copy Items to the iPhoto Library.
- Drag the images from the TC back into iPhoto.
Incidentally, when you burn DVD's from iPhoto, they're not normal data DVDs. These are special iPhoto DVDs. Put the DVD into your Superdrive and the images show up as part of your iPhoto library without having to import them.
The process is similar in iTunes with songs and movies. Go to Preferences/Advanced and uncheck Copy Files to iTunes Library.
An advantage of this method is that all your songs, photos and movies are in iTunes and iPhotos and not just a limited number. Normally we find ourselves pulling movies or songs in and out to save space and we don't have to do that anymore. Once you've done the process, you can set new files to go into iTunes and iPhoto and then yearly do the process of moving locally stored files to the TC and then importing aliases back. Note that calling up your files doesn't work as fast as when they're stored locally, but the massive amount of space gained is well worth it.

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