That is the only snag--must always copy to hard drive first. Not a prob with PSx/PS2 backups (that is how it HAS to be done), but it is nice to do Audio CD's on the fly.......small price to pay for reliability though.
As for the 16 bit slow down...not sure if it is that much of an issue anymore with the newer controllers out there. I have an Add-in ATA100 card, and it didn't slow anything down with my burner on same line as my secondary drive, but they were all DMA 2 or higher capable drives anyway. Only way to know for sure is to test them with SiSandra or other benchmark utility.
The big trick with putting 2 CD type devices is which will handle the traffic best. Remember the Master drive sets the pace for the channel. On older controllers, a slow slave would slow down the Master--I found running them in Cable Select mode allowed my CDR to run faster when my DVDROM was connected as Slave on the MBoard's ATA66 Controller, setting them by Master w/ Slave and Slave caused a slight slow down in CDR reads--most noticeable in Audio Ripping. Again, you may never know unless you test them.
http://www.sisoftware.co.uk/index.htm
Great tools here.
Good Luck!