You can have photos and project files on the same drive, because after adding photos into empty project and start aligning phase, the photos will be automaticaly cached in system RAM by windows.
I definitely notice this before i even add the photos to MS!
I download them off the SD Card to my SSD, and then immediately backup the SD Card to an external HDD... That 2nd copy operation takes a fraction of the time, as all of the 3,000 jpgs are still in Windows' cache!
Here it pays to have 'too much' RAM (64GB in my case)... Even if the applications themselves don't get faster if they've already got enough, as Windows will just use all those 'excess' GB or RAM for caching lots and lots of files.
Oh, and the other obvious point to be wary of: Make sure the cable can't be knocked, such that the External HDD might disconnect/reconnect momentarily (Laptop users!)... Sod's law dictates that this would certainly happen right at the end of the processing job as it's writing out the finished data!