I was right doing it up until about 2 weeks ago (with several reboots to prove it still worked). The only reason I put the external drives inside the HR20-700s (two of them) is because the fan had failed on one of the MX1 cases. But it was working fine with the internal disconnected long after the claim was made that it would not work. <shrug>
Of course I am regretting it because the annoying 'thrashing' is even louder in the unit than in the external cases.
Huh. I couldn't get the 20-700 to reboot with the power cord to the internal pulled. I dunno what to say.