I have seen these used successfully many times over. In fact, Maximum PC's most current Dream Machine uses a similar dedicated PSU. They do work as long as you have a bay to park them in.
Running it externally is going to be iffy. An option would be to use an external optical drive and park the PSU in the bay. You really don't want to have a critical component, like a power supply, expose like that. You may also have significany cable length issues.