I have been doing that for years. I have a library of more than 400 GB with music, videos and movies. All that on a server and I can even listen to music from my house or anywhere in the world if I am connected to internet, without changing anything in my setup. I can sync my iPhone and iPad.
1. In iTunes's prerefence, in advance, choose your NAS.
2. Be sure the two items below are checked (Keep itunes forder organize, AND copy files to media folder)
3. In the File Menu -> Library -> Organize Library -> Check Consolidates files and OK That's it
.... If you want them back to the original location, just change do the same thing in reverse. All file aleready at the right place will not be copied again. For a while I was doing this to make a backup.
You have still have the iTunes folder on your mac, and Yes artwork downloaded by iTunes will stay on your mac. You can use some software to embed the artwork into your MP3/MP4 but the icon preview will stay on your mac.
Warning.
I have done that on a LaCie NAS and it was a pain. File system was not HFS+ and I lost the é,è,à, etc
some will work.
I finally opted to use another mac as a server, create a share via AFP, and with domain name and a DNS installed, I can use it from anywhere, the drive beeing map with a full dns name, it can be resolved by the system either locally or away from home, great !!!! (you have to put the "Automount" option in your share.
Hope this help.