I currently use a PC that is always-on, have the media library on a large 10TB drive fitted internally, and the data of the library on another drive.
I was wondering if moving the 10TB drive to a HDD enclosure with USB3 and using the Readyshare USB3 ports on the NETGEAR router would create a severe penalty? Or really with kids, etc throughout the house using Plex, would only having to download data from my PC and getting the media right from the router actually be better? I assume all processing etc might be annoying, as my server would have to download through the router while processing and reuploading to the router?
Having the media on the router is of no use for Plex. Because you need to have a Plex server running. And Plex server cannot run on the router.
So you still need to have a machine with Plex server in your network. And it’s still preferable to plug the hard drive with the media into this machine directly, instead of trusting the relatively slow router hardware to work performantly and responsively enough to provide the media over the network.
I agree with @OttoKerner for the most part. I have a Windows PC acting as my PLEX server and have 12 TB of external storage connected to my Nighthawk Router via USB3 and the setup works very well with no latency for both local and remote users. Otto is correct you must still have a server.