My Airport Extreme and Time Capsule were always quite good, very easy to setup. Note of course that mine were the older flat jobs.
Is the wifi coverage very good from the time capsule?
Yes, but three houses over is pretty amazing from anything. WiFi tends to drop away very quickly when it has to deal with walls and things.
Will it sufficiently provide wifi signal to the front and back of our property? (Suburban property)
I always needed two, one at the front and one at the rear to cover the whole house. Maybe re-locating it into the middle would have helped, but even as is WiFi outside wasn't great.
Can I connect an external hard drive full of movies to the time capsule and will it work as media hub via iTunes, Plex etc etc?
Not really. You can share a HDD as a network drive but both iTunes and Plex require a server to be running, something the AirPort/Time Capsule doesn't do.
Any recommendations for third party wifi router to the tune of max $450?
Should I just go to Telstra shop and buy their modem/router called max2? (We have Telstras fastest cable internet, not adsl/nbn)
Is your cable modem running in bridge mode? Just confirming that you just need a router?
If your current cable modem doesn't do WiFi it's bloody old now! It could be worth bailing Telstra up for a free replacement. It might not be the best modem/router/WiFi but when it's free it's pretty good value. If it turns out it sucks, back to bridge mode for the shiny new modem and add your own router & WiFi,
I recently replaced both my older Apple units with 2 x UniFi AC-Pro units and they are great. I still wouldn't say I get coverage three houses away but I definitely cover my whole house and yard.
In my case I've got the Optus supplied cable modem running in bridge mode feeding a D-Link DIR-825 router which is running custom Gargoyle software. Gargoyle is bloody awesome as a router, but is overkill for normal humans. For me it does DHCP with fixed addresses for a remarkably large table of devices as well as a range of custom rules/routing/blocking/restrictions.
If you go down the UniFi path there is the Unifi Security Gateway router which integrated very nicely, although it's missing some features that I want so personally I was looking at the Edgerouter range instead although sadly it then doesn't do the whole UniFi integration (not that it's needed).... again that whole normal human thing.
Bottom line here, my setup is modular and needlessly complicated for a home environment... but then I'm a giant tech nerd who loves toys.