1) Someone mentioned moving just the events off but not the projects - won't the projects be equally big files as it contains the same DV footage? Is there an advantage to the project being on the internal HDD?
Project files normally just contain a set of instructions detailing how to export the source content as a finished file. About the only thing stored in the project file of any great size are the "Media Browser" copies of your output. However, iMovie '09 now allows you to move both Event files and Project files to an external drive. (I just finished moving everything to an external 1 TB drive.)
In most cases, I am working with video conversion NOT editing for a "movie" - so I'm talking an hour of footage in the Event, an hour in the Project (and end result, the movie.)
If trimming and converting is all you are doing, an application like MPEG Streamclip might better suit your needs as it has few, if any, restrictions of storage/access/target compression formats.
2) If I want to move all the files to the external, how should I do this with the upgrade to iMovie '09. Will there be an opportunity to install '09 and then choose a location, then something handy like the "Consolidate all files" feature (that is in iTunes)?
If you perform the upgrade first, then the work flow would be to
a) Events not in Project use - "Command-Drag" Events from their internal drive and drop to external drive.
b) Active Projects - "Command-Drag" Project from source drive to target drive and then select the "Move Project & Events" option to move both to the external drive.
NOTE: Do not just drag Event and/or Projects as this performs a "copy" action -- i.e., it creates two copies of the files and does not update active reference pointers.
Or, should I move all of the existing iMovie files NOW (these are both projects and events from iMovie HD and iMovie 08), before I begin the upgrade.
I didn't, but there was nothing I could not live without if it got lost. Most of my projects are just to answer questions here so there was nothing of "high" priority to lose. As Dontwhine says, its a good idea to back up anything you couldn't afford to lose but frankly, my switchover went without a hitch.
ADDED: Wow! Looks like an active group here. Will have to make shorter responses to keep up...