I'll be honest here, I personally don't think that upgrading to 1.44Mb is worthwhile. This is my own personal opinion, and it shouldn't stop you from doing the upgrade if you wish to.
I have done the 1.44MB fdd upgrade, and you'll need a 1772 that is capable of running at the higher frequency needed for 1.44MB operation (Not all are), or the Atari Ajax FDD controller in order for it to work reliably.
However, for me the benefit of having 1.44MB was just not great enough for the amount of work that the upgrade took, and I eventually just took it out and went down the Gotek route.
Also, given your drive will be external, you'll need that extra wire Troed mentioned for DD/HD detection, which needs to go back to the add in board, so that is going to be harder to do with just an external drive.
AFAIK you can use a Gotek as an external drive, but I would suggest you ask around the forum to see if anybody else has done this with an original 520.