It used to work... Now they've fixed it.

Apple's Time Capsule rocks.

For a while the Airport Extreme Base Station (AEBS) -- with a disk added -- would do the same thing. You got Time Capsule backups seamlessly and continuously.

No more. Version 7.4.2. fixed the "bug". Now the AEBS no longer backs up to a disk.

They've been saying that since Nov '08. See article HT2038. In spite of that, a lot of folks saw it working. Try this Google Search.

But it worked for me up until this past weekend. The "upgrade" broke it. Damn.