It's essentially correct that you can remove them from your hard drive (even place them on an external hard drive, or archive them to DVD-RW). As long as they're listed in iTunes, they will remain on your iPod.
I'm not sure what you're referring to when you speak about "capitalization scripts" or modification of ID3 tags. Firstly, video files don't really have ID3 tags (there is metadata, but nothing that an ID3 tag editor would touch), and secondly, if they're not there, there's no way you can modify the tags. iTunes doesn't really care as long as they're not removed from the iTunes database, so unless you're running tools directly on the iTunes database you shouldn't have a problem.