The "best" way to do this is locate another AirPort router that will match the wireless performance of the Time Capsule.......like an AirPort Extreme......right in the middle of the area where you need more wireless coverage and then connect the Time Capsule and AirPort together using a wired Ethernet cable connection. There is no signal loss when you do it this way and both AirPorts perform at maximum speeds.
The "compromise" way to do this is locate the AirPort Extreme about half way between the Time Capsule and the general area that needs more wireless coverage and then have the AirPort connect to the Time Capsule using a wireless connection. The AirPort Extreme needs to be able to pick up a strong signal from the Time Capsule in this type of setup. The more that you have line-of-sight between the Time Capsule and AirPort Extreme, the better the network will function.
The big downside to this type of setup using a wireless connection between devices is that you will on average, lose about half of the potential speed on the entire network. So, while your network will have greater range, it will also be a significantly slower network.
So, among the two different ways to extend a network, one method....wired connections between the Apple routers.......is much better than the other in terms of performance.