Help me with what to purchase.

Froberg wrote:
No. I intend to transfer the data to external drives for safe-keeping.. I've no intention of swapping drives out willy-nilly.

Good. Then I don't understand your concern about array failure. Recovery is a bit easier on the RAID-1 array you are proposing. But it is not easier for the RAID-5 array. Personally I'd go with XRAID-2 (possibly dual redundancy), and two backups (rotating one on-site with one off-site).

Froberg wrote:
AFAIK my Blu-Ray player transcodes video for me, as it stands...

No it doesn't. It decodes the audio/video it receives from your servers, and renders it. It isn't capable of video encoding. Also, to reduce the data rate of the video stream you'd need to convert the video ("transcode") at the server. This is the video equivalent of your on-the-fly conversion from flac to mp3 (which is audio transcoding).

Froberg wrote:
No, that is something of a wish-list item for me. I would like to be able to use the data connection on my phone to pull media from my server at will. I was given the impression that this could be accomplished with the ReadyNAS line of products?

The combination of readynas remote + readynas dlna is supposed to do this (and works sometimes anyway). However, the throughput over the internet is very inconsistent, so streaming is not that easy. What works better is downloading the file from your NAS to the phone/tablet and playing it. You can also try FTP streaming (there are some mobile players that support that). That has the advantage of not needing to be routed through netgear servers. However, it can still stutter.

Recently I picked up a Seagate Wireless Plus - which is essentially a portable wireless NAS. I haven't had it long enough to fully assess it, but so far it seems to be an effective way to stream local content to my Android phone and iPad. It has 1 TB, so it would hold your music collection in MP3 format easily.