Unless you simply can't afford to spend $7500, it sounds like you definitely want a real backup system. You're talking about catastrophic failure. A good portion of catastrophic failures are environment related: fires, flooding, hurricanes, etc. And if your backup is sitting right next to your server, it does you no good.

In addition, even if you want to replace the tapes with large USB drives, I still think you'd be better served by real backup software.

But to each his own. Sounds like you've already made up your mind about what you're going to do. I feel for the next person who deals with the system, though, and can't figure out what you've done.