What you describe as your current arrangement is not an off-site backup, it is an off-server backup. By my reading your backup server is in the same facility, probably the same rack, as the servers it is holding backups for.
You should certainly have some form of physically separated backup, i.e. tapes or a really-off-site backup (i.e. a server in another facility), in case a one-in-a-million accident or hack happens to affect all the servers in your rack at the same time.
1.5Tb of data flowing every night, if you go for a really-off-site-server backup option, is not going to be cheap (you'll need that much bandwidth at both sites) so tapes might be the better option for you. I suggest you do at least a cursory cost/benefit analysis to be sure though. Tapes also have the advantage of being an offline backup - if someone manages to hack in and wipe both a server and its online backup (as happened over at webhostingtalk.com recently) they won't be able to touch the offline backup (the tapes).
In either case keep the local backup server instead or replacing it with tapes and/or a server elsewhere - it will be quicker to restore from if you ever need to, and you can use it to co-ordinate the backups instead of each server talking to the other resource separately.
Summary of terminology:
- off-site : actually physically at a
completely different site
- on-site : obvious...
- on-line : connected to the network,
locally or otherwise, and always
- off-line : not connected (i.e. tapes or disconnected external drives)
- off-server : on another machine or media (could be off- or on-site, off- or on-line)
Both off-site and on-site solutions can be on-line or off-line, with offsite+offline offering greatest protection and onsite+online giving the most efficient backup+restore processes.