Further info:

Spotlight is still indexing the sparse bundle on Time Capsule. Progress indicates about 10 percent complete since 6:50 a.m. (It's now 10:20 a.m.) with 20 hours remaining.

Of course, we all know that these estimates of remaining time are notoriously inaccurate at the beginning of the process and get more accurate as more progress is made.

Curious.

Not so curious. Networks are slow. :)

Another update, just in case anyone thought this would be a really quick process:

Now, 7 hours later, Spotlight still indexing backup directory on Time Capsule, a little over 40 percent complete now. Time estimate still wonky; in the last 15 minutes time estimate has gone from 70+ hours down to 15 hours. I suspect as more files are indexed Spotlight discovers ever more hard links to files/directories already indexed which need not be re-indexed (a non-techie's speculation).

A few minutes later now, and estimate is back to around 30 hours. Go figure.

But it will eventually finish.

ALL DONE AND PROBLEM-FREE

For the benefit of any who want to migrate Time Machine backups to a new drive (especially Time Capsule) so as to retain Time Machine backups as far back as possible, here's a final report on the experience.

It took quite a while, but the result is just what was desired: all existing Time Machine backups moved to a new drive (Time Capsule), and the new TM destination includes all the files back to the beginning of the TM history as it existed on the "old" TM destination drive.

It took quite a while for SuperDuper! to copy the files to the new destination as described in this thread, but the copy was successful with all links intact. One time-consuming part for me was, I'm sure, that I was copying to an Ethernet device. Even with Gigabit Ethernet, theoretically faster than FireWire 800, network traffic no doubt slowed copying.

And it may well be that the copying took longer because all the special links had to be maintained.

The other time-consuming step is that after the new TM destination is selected in TM prefs and TM turned back on, the new destination must be reindexed by Spotlight before regular TM backups can continue. Again, the new destination being an Ethernet device no doubt slowed progress, but a complete Spotlight reindex of 165GB takes a while regardless of the interface.

And of course I retained the files on the previous TM destination drive until the new destination was set up and working as expected.

Bottom line: You can copy existing Time Machine backup files to a new drive with SuperDuper! and keep TM history intact. It took two days to move files from a FireWire 800 external drive to an Ethernet-connected Time Capsule (Power Mac G5 dual 1.8 GHz with 3GB RAM), but it worked.

Thanks again, Dave, for the expert assistance!

Yeah, Gigabit Ethernet is not faster than FW800. The wire speed might be faster, but that's only part of the equation. (But it'd take a while on both.)

Glad everything worked out as expected.