Overall the procedure was painless, just time consuming and there are a bunch of things I've learned to working with partitions and disks on OS X.
1. It's possible to create a RAID set by either using the whole disk OR from a partition on that disk. In a mirror set, both disks need to be partitioned the same.
2. Encrypted partitions cannot be resized using Disk Utility. In addition, if you have an encrypted partition on the same disk as other, unencrypted partitions, the unencrypted partitions can't be resized until the encrypted partition is deleted.
3. OS X Lion Server does not notify you if there is a failure of one of the disks in a RAID set! For this I found a great piece of software called RaidEye. It starts up as a background process that monitors the RAID sets defined in OS X. If there is an error, it will play an alert sound and send an email to an email address you specify.
4. It's possible to change the "Automatically rebuild RAID mirror sets" option after defining the RAID set using dsutil on the terminal.
5. Using Carbon Copy Cloner in block transfer mode is much much faster than just the usual file clone operation. Unfortunately this requires the target volume to be larger than the source.