Turns out, it's very, very easy to set up an external drive on one Mac as a Time Machine volume over the network.
- Share the external hard drive. To do this, do a Get Info on the external drive and click the Shared Folder checkbox.
- Open up System Preferences > Sharing.
- Make sure File Sharing is enabled.
- You should see the external hard drive listed in the Shared Folders column. Click it.
- Click the + icon in the Users column and add the user you connect with from the networked computer.
- Set up Read & Write access for that user.
- Ideally you should remove/lower privileges for other users here. In my case the shared external drive had all kinds of unreasonable default permissions for Unknown User, Guest, and Everyone.
- On the networked machine, go to the terminal and enter:
defaults write com.apple.systempreferences TMShowUnsupportedNetworkVolumes 1
- Use the Finder to connect to the machine hosting the external drive with the user you configured in step #3 above.
- Open System Preferences > Time Machine.
- Click Select Disk.
- You should see the external drive listed, pick it.
- Profit!
So next you're probably wondering, dang this initial backup is going to take forever. Well, there's a trick for that, too. Apple File Sharing works over a local non-routed network (ie Bonjour). So just hook up your two computers with an ethernet cable, and disable WiFi on the machine that doesn't have the external drive attached. You should still be able to see the shared external drive in the Finder, only now it's running on Gigabit Ethernet (or the fastest your two machines can manage with each other). This is a great way to do the initial backup, and subsequent backups will be much smaller and not as big of a deal.
Enjoy!