It's possible, but I've had less than satisfactory results doing it. USB2 just doesn't seem able to stream as much quantity as one would like. Certainly more inferior to Firewire400, and much more inferior than internal ATA or SATA drives.
I added Firewire 800 cards to my PC's and the drives benchmark almost as fast as internal ATA on Read but about half on Write (even with write caching enabled). Samples stream fine. My external drive if referred to as my sample rest home. Not dead but mostly retired.
I tried a Firewire 400 external drive and wasn't happy with the results (my CPU overloaded much sooner than before, probably the DFD couldn't keep up?) so I added a SATA internal drive and it works great. I now use the external drive just for backups.
I'm now using a MacPower Icecube ide external hd to store my kontakt samples & kompakt-based virtual instruments libraries. I can get 180+ voices in kontakt 2.1, and i think i haven't push it to the limit yet.