Maximum external USB storage beyond song capacity?

I have my original 5.5 gen 80gb ipod touch in great shape besides what I'm pretty sure is the hard drive. I've been thinking of upgrading to the MSATA or SD card adapter. I hear the limit is 1TB. Or is that limit just an iTunes limit? My plan is to use the excess storage after music as an external storage for video. Since most smart TVs can play files off of USB, I thought a portable hard drive in the guise of an ipod would be pretty cool. Another question is given the ipod Ata native interface, is it possible for video data to read fast enough to play on a smart TV. Again, ipod isn't playing the video, just serving over USB to a smart TV.