Will iCloud work with iTunes like my external drive?

My music library is about 500gb's containing my imported cd's as well as music purchased via iTunes. I currently have my library on an external drive and connect it to my Mac and PC when I want to listen thru iTunes or update my iPhone's music.

I was considering getting the 1tb iCloud service to host all of my files. Does iCloud work like an external drive where everything is in folders that I can then use to connect my iTunes on either OS X or Windows 7?

Has anyone tried this and if so did you have any issues?

Thanks!