How to merge two hard drives into one on iTunes?

I have my iTunes music files stored on two 500G hard drives. I would like to merge them into one 1TB drive. I think I can use consolidate library function to merge the drives by using the following method.

Hook up the new drive, then point to it as the drive for importing new music in Advanced options. Then consolidate the library. This will copy all tracks on two drives to the new drive, and maintain playlists etc. Once complete, I can erase/disconnect the two old drives.

Since this operation cannot be undone, I want to be absolutely sure of what I am doing. Do I check both the options - Keep iTunes Music Folder Organized AND Copy Files To iTunes Music Folder When Adding To Library? Or do I need only to check the first option.

I also found the following warning on another forum regarding consolidating library.

"My only warning would be if you have compilation albums or homemade mix albums with tracks from different artists/albums in the same hard drive folder. iTunes will move and reorganize your tracks by Artist and then by Album. So if you have mix folders full of singles by different artists, they will get torn apart and put in your new library location by artist/album thus ruining your mix (at least in older versions of iTunes)"

Is this true with iTunes 7? I have hundreds of compilation albums. This would be a nightmare if iTunes put each song by a different artist into a new album folder. What other ways can I move the music folders from two drives into the new drive and maintain the integrity of compilation albums?

Anyone has done this?
It can be undone since it leaves the files where they were and only makes copies.

1. make a backup copy of the itunes .xml and .itl file that are in the iTunes music folder so you can restore them if your new library isn't as you like it.

2. in advanced preferences tell iTunes the new drive is the location for the music folder.

3. consolidate

I don't know if it will end up as you wish but since the original files are where they were and you have the old iTunes libray files you can put it back as it was.
My library was once damaged. I deleted it and rescanned the drive with itunes and all was fine. Using that logic you could simply copy your files from the 2 drives to the one larger drive and then scan with itunes.
One word,raid.
Rives, that will work but playlists will be lost if that is a concern.
You'll be fine. Definitely back up your iTunes Library file like Herman suggests as a safeguard. The"Copy Files To iTunes Music Folder When Adding To Library" setting is not relevant to this operation--doesn't matter you have it on or off. If your compilation albums are marked in iTunes as such, they'll be treated the same way when you Consolidate--no worries.

Some people insist on "manually" organizing their albums in the Finder rather than letting the iTunes data base do its work. They create "mix" albums in the Finder rather than using iTunes playlists to do the same thing virtually. If you don't let iTunes organize your music, then using functions like Consolidate Library may mess up your customized folder arrangement. I'm sure that's what the post you saw was about.