Can Time Machine be used as a Drobo system I came across some products by Drobo that let you use an array of external hard drives seamlessly. Would Time Machine be able to do something similar?  

For example, suppose I have HD1 with photos and connect HD2 (empty). Will Time Machine replicate some of HD1 data into HD2? If not, what is a reasonably cheap alternative to Drobo?
Time Machine just takes all the volumes mounted and copies them all to one destination volume. On Mountain Lion, you can have multiple destinations, but they get written to in round robin style (so any one backup set goes to one drive as opposed to mirroring the data on all destination volumes).

Drobo functions as a RAID - redundant array of independent disks - and OS X supports software RAID so you could combine several physical drives into one logical drive. The traditional RAID doesn't expand or shrink on the fly like Drobo does, but it also doesn't have some of the downsides of Drobo's implementation as well.