Once you are sure all your photos are there, you can delete the Library from the internal drive if desired. Once you do this, the external hard drive will need to be attached to access/sync your photos.
There is one problem with this plan, as there is no easy way to be sure, that the download of the original files from iCloud to the library on the external volume has finished.
At least, I have not yet found any status message in photos that is showing if all originals have been download.
The status bar in Photos does not show, if really all the originals have been download. When we are shown "updated just now", we can only be sure that the adjustments and metadata have been synced, but not, if all originals are now stored in the library.
The only way I found, that I can be sure if a library is including all original image files, is to make a copy of the library and to open the copy in Photos (without turning on iCloud Photos for the copy). If some originals are still missing, we will either get a warning about incomplete items (macOS 10.1103 to macOS 10.14.6) or will be seeing some white thumbnails when browsing the All Photos album in Photos 5 on Catalina.
Or, if we duplicate the library with PowerPhotos, we will get a list of missing files, that could not be copied and need downloading from iCloud. I am not using "Optimise Mac Storage", and so all originals should automatically been downloaded to the Mac. My Mac has plenty of free storage (there are at least 500GB free and not just available), but still the Mac is dragging its feet about downloading photos from iCloud unless I force a download by working with the photos. There are always several hundred incomplete photos, when I check a copy of my iCloud Photos Library and I have to force the download of the missing items and copy the library again.
Have you found an easier way to check for originals, that need downloading from iCloud, Eric?
As it is currently, I cannot trust the backup copy of an iCloud Photos Library without checking for missing originals. I am always keeping separate backups of the original image files by exporting them, just to be sure I am having a copy of all originals.