The two technologies share nothing except the name and cannot be directly compared. The old Filevault created a spare bundle image file for your home folder, which was encrypted. The new one simply encrypts the whole drive in a way that is invisible to the user.
If anything there may be a slight overheard to managing a sparsebundle which will not be there for whole disk encryption, but I doubt that it will be significant enough to make it a part of your decision to use it or not.
I don't know of any way to remap another drive as a scratch space and, when it comes to data integrity I distrust complex solutions.
First, go ahead and clean all caches, and search and destroy old/duplicate/obsolete/redundant files and applications. I often find a lot of clutter, and uneeded installers, in my Download folder. Don't forget to empty the Trash. You might be pleasantly surprised at how much space you recover. Also see the excellent tip about recovering drive space by temporarily disabling Smart Sleep.
If that didn't free up enough space, solve this problem by copying one more of your larger files, for example in my case I might choose my Aperture Library, to an external drive. An alternative would be to copy a large directory. (In fact, the Aperture Library is a actually a directory structure bundle). Your choice of files should be influenced by what is simple (fewer files from fewer places) and will have the least impact on the system. For example, I would be reluctant to move my media files for fear of damaging their sometimes delicate links from the iTunes Library file. (This fear has been somewhat mitigated by iTunes Match, but still I'm cautious.)
Confession, I don't really have to copy this file because it's already on my SuperDuper! clone drive, and also backed up offsite for safety—so in reality, I would just check the integrity of those backups and proceed.
Use copy, not move. While I've never been bitten myself, the reports of problems moving large groups of files to an external drive, particularly when using Finder, are numerous enough to frighten me away from this bad practice. You need to check the integrity of your copy before proceeding.
Provided you already have another trusted (meaning verifyed), redundant, backup copy of the file(s)—you do, right?—you can now delete the file(s) from your main drive. If not, take the time to make another copy. A file doesn't exist until it exists in three places – Alex Lindsay, The Pixel Corps.
The rest should be self-apparent. Turn FileVault off. Copy the file(s) back to your main drive and again verify the integrity of the copied data. Activate FileVault 2—remembering to safeguard the recovery key.
Laborious, but safe and approved by Apple in that there's no voo-doo involved.
Best Answer
As I understand it, when you login, the encrypted disk image gets automatically mounted (and a link created to it). Thus, making your home folder
/Users/moopoint to the sparsebundle file within/Users/.moo. If you right click (or CTRL + click) on your home folder in the Finder and select Get Info, you should see thats its a Volume of a disk image with something like/Users/.moo/moo.sparsebundle. I beleivedureports its twice as its simply traversing the same effective folder structure again.