storing bitcoin's database directory on an external drive?
Bitcoind requires your wallet file to be in the same location as the rest of the files, so I think what you want to do will be difficult, as it might require editing the source/recompiling

However, you can just store your wallet on the external drive too. 

You can encrypt the wallet if you don't want it to fall in the wrong hands

You can use the backupwallet command to back it up if you are affraid of the quality of your external drive...