It's how the console works, no way around it. You can't shrink the file, or you're missing game chunks. They're not going to go and segment the game, and give you the option to only install one part at a time. With TMCC, you could maybe get away with it (only install one campaign at a time), but for something like Madden or Call of Duty, you can't opt to not have part of the game missing, or you can't play it. The file IS the game, so you can't have the file smaller than the file itself, unless you compress it (which, with a Windows PC, requires unpacking the file before use, which would make the overall size larger during use).
As for the storage issue with the drives, many are saying that the USB 3.0 bus of the external HDDs is actually FASTER than the SATA II bus of the internal drive (it could be that the externals simply carry faster drives). At worst, there's no reason to fear performance degradation going to an external for additional storage, from what I read. Regardless, it takes quite a few games to fill a drive. Mine peaked at 83.8% full, I think. However, upon removal of games I was obviously not going to be playing (the trash indie stuff from GwG and titles I already finished and traded in, like Sunset Overdrive and Middle-earth: Shadow of Mordor), I'm back down to 63.9%, and that's while still carrying 100+ GB in games I don't play, but might repurchase (including Forza 5, The Evil Within, and Madden 15).
Truth be told, there shouldn't be much of a reason to hit the cap of your drive for 1-2 years, if you're fine cleaning out games you finish. However, I know many are pack rats with that, and you shouldn't be forced to do preventative maintenance on your storage. It sucks, but it's what we've got. I'm personally waiting on the 3-TB WD Elements to get under $90 (it's been $100 a few times), then I'll pick that up long-term. However, I'm more than fine with dumping completed games from my HDD to make room, if necessary. Since everything I want on the One for 2014 is already out, I won't have to worry about a flood of installs on my console...except the 5 or so titles I might grab at Black Friday.