Need advice on on a Mac Pro 1,1 Media Center

I currently have a 2009 Mac Mini running as my home media center, but I recently came by a FREE Mac Pro 1,1 and have decided to repurpose it as my media center so I can migrate my Mac Mini to my bedroom TV where it will live an easy life doing nothing but run Plex Home Theater, Netflix, and EyeTV. This machine falling into my lap was also quite timely because my 4-bay Drobo is running low on available expansion and another Drobo isn't in the budget at the moment.
This vintage mac pro is running Lion 10.7.5, has 1 old and crusty 500GB hardrive, dual x5160 processors, 4GB RAM (one stick i'm pretty sure is toast judging by the red light and the kernel panics), and the standard NVIDIA GeForce 7300 GT 256MB graphics card. It will be used primarily for the following: network storage for iphoto and itunes libraries, streaming video, Plex Media Server & Plex Home Theater, and Handbrake encoding. I also have a goal of safety of data for my movies, photos and music as this machine will supplement my current Drobo storage.
My plans are for a 128GB SSD boot drive installed in one of the PCIe slots and then to load up all 4 of the 3.5" drive bays with WD Green hard drives. I have also ordered 4GB of replacement RAM, so upon removal of the faulty unit I will have 7GB.
Here is where I need advice because I am not very familiar with RAID and the differences between hardware or software raid. Am I better off getting four drives of the same size and setting them up as RAID 5 (I think) using Apple's RAID utility or should I throw in three 1TB drives and then install a fourth 3TB or 4TB drive as a Time Machine backup for the other three?
Should I upgrade the OSX to the technically unsupported latest version? Or is it not worth the trouble for this application?
Also, is there any benefit to upgrading the graphics card to the ATI Radeon 5770? Would this yield an improved image quality? I am outputting to a Denon AV Reciever and subsequently to a 100" projection screen, if that makes a difference. I also noticed the 5770 has an HDMI port, wich would be nice, but not necessary since I can use a DVI converter and woud still need to use the optical audio out anyway.
Much obliged for any input

My plans are for a 128GB SSD boot drive installed in one of the PCIe slots and then to load up all 4 of the 3.5" drive bays with WD Green hard drives. I have also ordered 4GB of replacement RAM, so upon removal of the faulty unit I will have 7GB.
PCIe cards that use or support SSD are not bootable until you get to 2008 (and that is limited too).
Green are not suited for any form of array unless say NAS and WD RED.  Better option would be 3 x 2TB WD Blacks in a mirror, and too many people only use two drives, well 3 is much easier safer and works better. Might want to invest in www.SoftRAID.com product even.
Best price and quality, got my 1,1 with 8 x 2GB (ideal is 4 or 8 DIMMs)
2x2GB FBDIMM DDR2 667MHz @ $25
http://www.amazon.com/BUFFERED-PC2-5300-FB-DIMM-APPLE-Memory/dp/B002ORUUAC/
With price of 250GB SSD $155 I'd go with that or stick with $89 for 128GB .

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