Could you use a 500gb SSD external hard drive for photos only, to save icloud usage?

Sure, you can move your Photos Library to the external drive and turn off iCloud Photos on all devices to release the space.

The only suggestion is to make sure you have a backup strategy in place. If the external drive fails its going to take your photos with it, and without iCloud Photos there will be no other place to get them from. So make sure you back them up to another hard drive in case of disaster.

See here for how to move your library to the external drive: link-> Move your Photos library to save space on your Mac - Apple Support

You don't have to back up the backup if you don't want to, but without any other backup option, it would be kind of dangerous.

If the photos are only existing in a single location, then it's technically not a backup. For a backup to be backup it needs to be a secondary location where the data is available in addition to the normal primary location.

In the case of iCloud Photos, the primary location of the Photos is the device while changes are synced to iCloud. If something happens to the device, then Photos are available in iCloud to get back.

If you move all the photos to the external drive, and turn off iCloud Photos, then the Photos only exist in the external drive, so its their primary location.

If you decide to simply copy the photos to the external drive, but keep a local copy of the photos on each device while turning off the iCloud Photos option, then the external drive becomes a backup yes and would not really need to be backed up. Though some people may suggest at least 2 backups in separate locations to be completely safe. This is generally not required.

You can. But, I would probably keep the photos on your Mac and use an external drive for a Time Machine backup. Photos are precious for most users and simply pulling them down from the cloud leaves you no viable restoration path.