Question 1: Yes
Question 2: No, does not do it automaticly. And only likes the same size drives.
Question 3: Most have upgraded to 7200 rpm drives and installed a high capacity fan to handling the cooling. The newer drives actually run cooler than some of the 5400 rpm vintage drives. I think one user took the plunge with 2x400=800 gigs

, or was it the new 2x500= 1T.
I think the 2000 only has a 50w power supply.

Maybe it's a 120w
The easiest way to do the upgrade a 2000 to high capacity drives is:
1. Change your drive config from RAID1 to JBOD. This will put all data on the master.
2. Copy all data from the master back to the slave.
3. Shut down and remove all drives.
4. Install a new drive in the master position.
5. Startup the 2000 and let the snap format and install the snap OS. May take a while to format. Wait at least 10 min before trying to connect. Verify that you have full capacity - overhead.
6. Once complete shut down and re-install the Slave drive (your data).
7. Copy all data from the slave drive to the new master.
8. Shutdown and install the new Slave drive.
9. On reboot the snap will format the slave drive for use.
10. Once the format has completed, You can now set the RAID 1 backup. All data is on the master so it will be mirrored to the slave.
This way, you have your original drives intact with all Data for a backup.
If nothing has been changed your drive setup should be :
Master = End of the 40/80 Conductor cable. CS or M (front of case)
Slave = The Middle connector. CS or S (closes to power supply)