Hi everyone, so after hearing back from a couple people on the risk/benefits of RAID 1 vs volume copying I decided to go with volume copying (mostly out of fear of a corrupted RAID disk which would be harder to recover from that one that was just used as a "normal" drive, plus there's a bit more independence/security in 2 drives with their own copy of data rather than 1).
Anyways, I tried to reconfigure/reformat and I got the dreaded 94% bug when formatting. The 323 would just hang at 94% complete and would never budge. After a couple hours of frustration I finally found a thread where a couple people reported success in downgrading from 1.06 to 1.04 and then doing the format. I had started with 1.04 out of the box and upgraded to 1.06 after building the RAID. I tracked down the 1.04 FW (the link is broken at dlink but you can get it at ftp://ftp.dlink.com/Multimedia/dns323/Firmware/dns323_firmware_104.zip), reflashed the firmware, and formatting went fine. Yay.
Now I have 2 separate drives and am going to do incremental backups to keep them synced without the concern of using the RAID. Good times.