I've seen it done before, although it's pretty risky, since it quadruples your chance of something going wrong.
Also, with an SE7221, I'd triple-check to make sure the 500GB SATA drives are on the compatibility list
-Unplug the first 120 hard drive and plug it to other PC and plug one of the 500 hard drive. And clone from 120 to 500 using some soft like norton, clonezilla...
- Repeat the process with the other hard drives
- Plug the four 500 hard drive to the server and the raid controller will see the RAID 10
Let me know if it works