ITunes Library - Move to external HD, but keep extracting on laptop. How?

Question

Appleoids--
I am preparing to buy an iPod. Therefore, I am converting my entire CD collection to AAC-128 on my laptop at work via "Copy & Eject" with a stack of CDs as I work. Due to the size of my collection, this will go on for months and my laptop is filling up.
I bought an external firewire hard drive. My intent is to sync my future iPod from the extrenal drive when it is plugged hooked to my laptop. I did some research and found how to move my library from my laptop to my external hard drive.
However, after I move the library, I will be continuing to extract music from my CDs to AAC at work without the external HD hooked up. It appears to me that iTunes is set up so that if you import from CDs, it only loads into the library. So I'm unclear what will happen when I try to extract AACs from CDs when the external drive is not connected. I don't see how to have a second library or how to extract without storing the resulting AACs in the libarary. Also, I am unclear how I would extract the new extractions from my laptop and add them to my external HD libarary.
It appears iTunes/iPod sync works seamlessly if you have one computer with a hard-drive that will hold all your music. Beyond that, you need a phD in iTunes to figure out how to make things work.
--Relentlesscactus
iBook G4   Mac OS X (10.3.9)  

Answer 1

OK, Bruce--That was clear and I'm very close to understanding this. Your answer to the "Consolidate Library" causes me some disturbance, however. Not in your answer, but in the way iTunes does this, as that's NOT what I need.
I basically keep two sets of music. One is stuff I record and manipulate, or download live music from torrents, the other is CDs I rip. The first doesn't go into the iTunes music folder, at least not until I convert it to AAC after manipulating it for later use on my iPod. Basically, the iTunes music folder itself is what I want consolidated, and what I will use for lossy files for use in syncing my future iPod. But I often listen to the full, unedited, lossless files in iTunes, which means iTunes is 'aware' of them (i.e. they are in the library now). So even if I remove the playlist, I think they are still in the library. I sure as **** wouldn't want every full-size, giant sound file in the iTunes library, but not in the iTunes music folder, copied to an external drive!
What I want is for every file IN MY iTunes MUSIC FOLDER to be copied to the external drive. That is, all my AACs and mp3's that I intend to listen to on the iPod. Short of going through thousands of library entries and removing all references to other files, and never listening to 'other' files on iTunes again, is there a way to do this? I'm looking for a 'Consolidate Old iTunes Music Folder into New iTunes Music Folder on External Hard Drive' function. I think there is a way to do this with xml editing or something, but my brain isn't that big.
ANOTHER QUESTION - Making Tags in iTunes
I am ripping a bunch of live recordings from Jam bands that a friend gave me. Of course, none of these concerts are in GraceNote. So iTunes says "import anyway?" and I say yes. Then, while it's ripping I do a command-A, command-I and do a group tag change. Problem is, though all are marked, the first track ends up in the "Unknown" folder. I guess it can't get tagged and rip at the same time. Is there an easy way to halt the import until all the tags are marked, or something else that will achieve the same result?
--RelentlessCactus
iBook G4   Mac OS X (10.3.9)