Hi Dude, I guess you are just looking for inspiration. Do not get mixed up between WBFS formatted drives and the wbfs file.
Format to FAT32 add your apps to the root of Hard drive then create a folder called wbfs, this is where your games will be ripped to in a smaller wbfs file.
Use mod any wii guide on here to install the full set of cios ( custom input output system) 202,222,223,224,236,247,248,249,250,251. Then you will be good for 99% of games. Most games will run on a base of . keep reading now is not the time for this.
Regarding the ISO 4.38 gb if you use a game manager or RIP your games with a USB loader the game will be RIPPED That means all the ISO buffering will be removed leaving you with a smaller/ lighter wbfs file .50 < > 4.38gb depends how complex the game is. Then yes it is stored in the wbfs folder. I hope that clears your view of things.
If you have a Wii game Manager you can copy any games loaded on your WBFS drive to a PC. Format hdd to FAT32 with Easues partion manager then copy them back as wbfs files. Or re rip your original discs.
It' all an educational voyage!!!