Q: Time capsule and Express to extend Extreme network

First, is it OK to add the Time Capsule to the Airport Extreme network or should I switch them?

Yes, it is okay to add the new Time Capsule (TC) to the Extreme's network, but, as you suggested, I would recommend that you switch them. To make setting up the new network, I would further suggest that you perform a "factory default" reset on the Extreme to get it back to its "out-of-the-box" configuration.

Second, is it preferable to attach the Time Capsule to an Ethernet outlet, or should I just let it wirelessly extend the Airport Extreme network?

For best overall wireless bandwidth, you will want to connect them using an Ethernet cable, and then, configure them both for a roaming type network.

Third, I have an old square Airport Express (non-ufo, but rather resembling a largish iPad charger). Can I use it to further extend the network?

It will depend on whether this Express is an 802.11g or 802.11n model. If it is the latter, you can use it in the roaming network.

First, is it OK to add the Time Capsule to the Airport Extreme network or should I switch them?

Your choice here, but if devices will be backing up to the Time Capsule over wireless, it makes sense to locate the Time Capsule where devices will be used most of the time to speed up backups with a more reliable connection.

Second, is it preferable to attach the Time Capsule to an Ethernet outlet, or should I just let it wirelessly extend the Airport Extreme network?

Ethernet is strongly preferred to avoid the 50%+ potential speed loss associated with extending using wireless.

Third, I have an old square Airport Express (non-ufo, but rather resembling a largish iPad charger). Can I use it to further extend the network?

Yes, using wireless if you have the 802.11n version of the Express. That would be model number A1264. Look on the side of he Express to see the model number....hard to see, so you may need a magnifying glass.

No, using wireless if you have the older A1084 or A1088 versions of the Express.

Yes, using Ethernet on any of the Express versions. But, if you have the older A1084 or A1088 version, you will need to use a Mac running Leopard or Snow Leopard, or a PC with AirPort Utility installed, to configure the older Express.