Time Capsule, MacBook Air, Airport Express, and my stereo: where the twain shall meet?

The MBA is wonderful, but, as we all know, not very capacious. My compromise is to store my iTunes media folder on an external hard drive, meaning that I can't play music unless the external is plugged in. When I want to play music on my stereo, I plug the stereo into my MBA, which is itself plugged into the external. Not very elegant!
I've thought of a potential solution, but not sure whether it's feasible.
Would I be able to use the Time Capsule as an external HDD—leave all my whole iTunes library on there and stream it wirelessly to my MBA without incident?
If so, could I then "re-stream" the music to an Airport Express, which would be plugged into the stereo?
I actually have the Express already, but it's plugged into the modem, which is not in the same room as the stereo. So, in theory, all I'd have to do is buy a Time Capsule, transfer my music to it, point iTunes to the new media library, plug the TC into my modem, set the Express to extend the TC's network, plug the TC into my stereo, and. . . voila, I can bring my MBA anywhere and still play any of my music through my stereo. And I'd also have a nifty 2 TB wireless external, certain to last me a very long time.
That's the theory anyway! Would it actually work? Is there a better solution? Thanks!

Yes you could use your TC HD for doing this however if you are already using the drive as a backup for Time Machine then doing so would be pretty foolish. All HD's eventually fail, so if you store any data on the TC's HD and also using it for Time Machine and the drive crashes then you will have lost not only your data but it's backup which totally defeats the idea of backing up. IMHO store your music (photo & movie) libraries on another  physical EHD and yes a wireless one would be fine.

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