Your requirements are quite odd. You apparently have enough music (not video) to exceed 8GB, but the thought of buying a bigger iPod sounds expensive to you. Usually, people with that much music, and a serious desire to listen in the car, don't consider iPod prices to be expensive...

Where will your future LCD screen be located? In the car or at home? Is the screen for watching video, or navigating/editing your music files? Transporting a hard drive in/out of your car, plugging/unplugging it seems like a lot of hassle to me.

I really think the best and simplest solution would be a new iPod with enough capacity. Also, you can take your music in the car, at home, or in your pocket, and you have a world of iPod accessories for any other application you might have.