Nope, copy and paste isn't going to work - iTunes has a separate XML file telling it where all the music is, so if you move it it's not going to know any more. So...
- Attach the master 500 gig drive (the other being the backup) and the new master 1TB drive at the same time.
- In 'Preferences', set your iTunes Media Folder Location to be on the new 1TB drive.
- Do 'consolidate library' (which I think is now under 'Organize Library' in iTunes 9, but I'm on a PC right now so can't check)
This will move all your music files onto the new drive, and makes sure the iTunes library knows where they are. After this is done (I'd do it overnight, that's a lot of music), you can dump the 500 gig drive, add your other 1TB drive and set up whatever backup mechanism you have to sync the two.