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Really useful post - cut and pasted into my back up planning file - and just to add to it.
I am several notches below that need at the moment but I suppose have gone through the thought and analysis process that you mention.
We use Mozy for a number of reasons and it ticks the boxes for own risk and cost analysis.
But to restore files from it is a slow old process so I quickly realised (that again from our own analysis) the need for still using local stored physical backups it is just that I do not have to do them quite so often as I used to as I see inbetween data loss as acceptable)
So if go for cheap online backup - be warned there may be more work needed for the solution to be sensible.
(2 external drives - 1 on site and one off site - and occasional dvd writes of data)