Looks like it can be done but you have to follow a set process for it to work due to the way TM is done.
http://www.macyourself.com/2008/12/10/how-to-copy-your-time-machine-backups-to-a-new-larger-drive/
I will give this a go and see what happens to this but might take some time as my TM is 400GB at the moment so this will take some time to copy over