Largest size..... some of the larger laptop sata drives are slightly taller than standard laptop sata drives (12mm as opposed to 9.5mm) so you might have to cut away some of the cases. No data size limits that I know of (some might arise at some point but not with current tech).
7200rpm should work fine - usual warning about keeping an eye on the heat.
If you are especially bored or solder happy you can wire a normal desktop drive if you can find a way to get 12V to the drive (laptop sata does not have 12V)- most people do some variation on the 12V fan mod.
xplorer360 among other programs will allow you to rip things from drive to drive, I am not sure about doing it hot (having two drives wired to each system and going across them without a normal drive in the middle) from a software side of things. There are other programs that do whole drives and imaging of 360 drives but I am not sure how they function if you are adjusting partition sizes as you will be if you update drives. If you can copy files from a hard drive to a USB drive you can transfer the files, the hard drives do not even have "security torx" screws (just regular torx).
Finally I do like big hard drives in my hacked machines but I would instead suggest you consider a USB drive- between XBLA, DLC and the odd GOD install 120 gigs should be more than enough for most purposes and the USB drive can see you doing the many many games routine.
