I have had a similar situation where my database was growing to nearly 1 TB and we were having some performance issues because a few of my tables were nearly 100 GB in size and because we were running on sql server 2000 it was quite difficult for us to perform the maintanence.

So, what i used to do is similar to what you said.

1.Transfer the required data to a new table with similar structure, rename the current table to some new archived table (Employee_Archived_2010) and then creating all the indexes as it is and then rename this by the original production table.

Doing this proved to be a better idea to me and the downtime was also very little because we transfer comparatively very less data to the new table . Deleting the old data from the prodcution table is never been a good practice .

But when you follow the above mentioned strategy pls make sure that all your depend objects are linked with the new table otherwise you might have to face serious issues specially if you have triggers associates with your tables\views.