itunes/ext hard drive integration

I got started in computer audio within the past 12 months and love the sound quality I'm getting. I have a Macbook Pro that is about 2/3 full on it's hard drive (200 GB), so I recently purchased a Minipro external hard drive with 1 TB. Since this computer is my primary computer and primary source, I want to rip my complete cd collection on it plus I want to back up all the files (pictures, docs and music).

I used Time machine to do the back up part and had a couple questions.

1. Should I rip all my collection into the music files that time machine added onto the minipro or should I create a new music file outside of what Time machine did?

2. Does it matter if the music files are nested in 6 layers deep of folders or is it better to have fewer nested folders for music?

That's all the questions I have for now, but more to come.

Thanks,
Ernie