Time Machine is the best way, because if a project gets corrupted, you can go back to a state where it was not corrupted.
If you wish to preserve a project in a certain state manually, right click on the project name in the project library and select "Duplicate Project". Give it a modified name.
If you wish to copy a project to an external drive, go to the project library view of iMovie. Click VIEW/EVENTS BY DISK. Then drag the project to the icon for the external drive in the project library list.
To be fully backed up, you need to back up the events as well.
You can move or copy events much the same as a project. (drag to copy, command drag to move).
Or you can move your project to another drive and then select the project and click FILE/CONSOLIDATE MEDIA.
Finally, when you say backup, it depends what you want to protect yourself from.
To protect against corruption or inadvertent erasure, use time machine.
To protect against a hard drive crash, use SupDuper! to create a bootable copy of your operating system, so you can be immediately up and running.
To protect against theft or fire, use offsite backup to a hard drive, or use one of the online services (I am using CrashPlan).
This is a much later reply to the original post but needed to do the same now so thought I should post my experience anyway
Since I just didn't want the iMovie Project occupying my internal drive space, I was just looking to move them to my external backup drive.
The simplest solution I found based on the multiple replies above:
Drag the Project file from one hard drive to the other in the Project Library window. iMovie instantly asks you if you want to move the related events as well and even tells you the size of both. Choose to copy both and it copies the Project and Event files into your external drive and automatically creates the required iMovie project and event folders too.
Hope it helps new users...